How Credible are You?
At this time, I'm not referring to the number of professional designations you have behind your name, how impressive your resume is or even what is reflected on your transcript. Although your transcript does provide insight into how credible you are, it isn't your college transcript I'm referring to, but rather your credit transcript. Credit sometimes has a negative reputation and I hope this blog can help provide insight into the benefits of being credible.
Credit can be (and is) a very practical tool to many, as it can provide opportunities to acquire assets you otherwise may not be able to. In addition to the physical assets that you obtain through being credible (house, car, credit card, ability to go to school, etc.), credit can also provide additional rewards you may not be aware of. These may be in the forms of cash back, travel rewards, or even a last resort emergency fund.
At this point, you may be asking yourself how to determine if you are credible or how you can obtain credit. The first step in the process is understanding your credit report. As I mentioned earlier, think of your credit report like your college transcript. During your educational career, you have a transcript that explains how well you have performed in school. It details things like classes you have taken, the grade you received, and the number of hours each course provided towards your degree. In the financial world, this sounds a lot like a credit report.
A credit report is a report on how well you have used credit. It provides lenders with an idea of how worthy you are of credit (or a loan). Your credit report will show the accounts you have (both opened and closed accounts), if you have had any negative marks on your record (such as bankruptcy or late payments), and even if anyone has inquired about your credit.
You may be wondering why it is important to be on top of the information on your credit report, especially if you haven't paid much attention to your college transcript and are doing alright. The stakes are a bit higher when it comes to your credit, as it will continue to impact many financial decisions you will make over your lifetime. The information on your credit report builds your credit score, which then determines things such as the interest rate you will pay on future loans. This may not seem too crucial if you aren't needing a loan for a new house, car, etc. but it takes time to build credit for these future (or current) financial decisions.
So, that leads us to the magic question "how do I get a copy of my credit report?" Here are a few other details to remember. You are entitled to receive your credit report three times each year for free. Once from each of the three credit bureaus (TransUnion, Equifax, and Experian). You can visit www.annualcreditreport.com to receive this information. I recommend pulling a credit report from each credit bureau once a year. Typically, the best practice is to check one bureau every couple of months to ensure you are keeping up with your credit throughout the year, rather than pulling all three reports at once. However, if you are checking your credit report for the first time you may want to pull all of them to ensure they match. Pick a date that is easy for you to remember such as tax day, your birthday or the beginning of the year to do this.
Being aware of your credit report is not only important from a financial aspect, but it is also one of the best ways to catch identity theft. This is another reason it is so important to check the report occasionally, as your financial situation will change. As you review the report, beware of any accounts listed that you have not authorized. If you do run into this problem you can find out more information here: https://www.identitytheft.gov.
- Joshua Payne