5 Reasons to Start Your New Year’s Financial Plan with a Credit Report

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happynewyearWhen was the last time you looked at your credit report?
Do you regularly review your credit report? Why or why not?

The New Year is a time for fond memories, fresh starts, and for taking a clear look at the year ahead. One of the most important things to do is to put together a solid financial plan and a good place to start is with your credit report. Your credit report can be a great tool to optimize your finances, and here are some of the reasons I think your credit report is so important to review this New Year.

1. Your credit report is a financial scorecard

Your credit report makes a great scorecard to track all of your credit/debt accounts. This makes it very easy to quickly list and itemize all of your obligations. Building your debt pay down plan from this list becomes as simple as organizing your debt stacking and doing a little math.

2. Your credit report highlights good and bad practices

90% of financial problems come from bad money behavior, not necessarily a lack of money. If you’re building a financial plan review your credit report for the good, the bad, and the ugly.
Are you making a habit of being a few days late? Are you playing credit card roulette with balance transfers? Do you have a home or car that you simply can’t afford any more? Has your income been hit or miss during this economic downturn. All of these things will be clear as you follow the trends in your credit history.

3. Your credit report is a simple way to track improvement

Once you have a plan to improve your financial situation your credit report is a great tracking and trending tool. You’ll be able to see debts being paid down, credit utilization shrinking, and your credit score rising. Super motivation when you’re improving and firm accountability if you slip backwards.

It’s amazing how things that get measured start improving.

4. Your credit report is used for more than approving mortgages

Your credit report is used by a lot more than lenders these days. This is the one of the main reasons you should be getting and reviewing your credit report regularly. Credit reports are used to approve mortgages, auto loans, and insurance policies. That’s probably not a surprise to you. However, you might not know that credit reports are also regularly used by cell phone, cable, and utility companies. It’s even used increasingly by employers during the hiring process.

5. Your credit report can be an early warning system

Finally, I like to get people looking at their credit reports regularly because it is a great early warning system. A few years ago my credit monitoring service alerted me to identity theft long before the thief did me any significant monetary damages. A regular review and monitoring of your credit report can do the same for you.

When was the last time your reviewed your credit report? Do you regularly review your credit report? Why or why not?

  • Terry Pratt

    Ha! I see no reason to look at my credit report because my credit has been in the tank for the past ten years and I can’t do a thing about it.

    At that time I had an abrupt total loss of income (health, hospitalization) which lasted over a year. As my income went from slightly above minimum wage to zero, I was unable to maintain payments on credit lines and all of my open accounts were closed and charged off, with two creditors obtaining money judgments.

    Since then, I have had no credit activity, but debt scavengers have bought and sold (and re-aged) my accounts, keeping them on my credit report. Also, I reaffirmed some of my debts several years ago; these have another year before they should drop off my credit report.

    As I now live on a poverty-level income, I can’t resolve these outstanding debts (and have not been seeking new credit) so why should I bother looking at my credit report?

    • http://www.Quizzle.com/ Quizzle

      Hi Terry, thank you for your comment. We understand that the road to establishing good credit can be frustrating. If nothing else, it’s important to check your credit report to monitor for identity theft and fraud. By checking your report, you can see if your information has been stolen and/or used by an identity thief. If you notice something that’s not supposed to be there, you can dispute the inaccurate information with the credit bureaus. Also, Quizzle offers a free credit report every six months. This helps provide you with a clear and easy understanding of what debts – big or small – are still lingering. Hope this helps!