No matter how many lines of credit you have open, you know your credit is fine. You make all of your payments on time. Heck, there are months you don’t use some credit cards and so you don’t even owe anything to make a payment on. Maybe you do owe some money, but you are current on everything. It’s all good. No worries. Right?
Well…… You may still want to check on that. Here’s why.
There are a lot of reasons to be checking your credit report. Perhaps the first and most generic and possibly the most important reason is ‘so you know’. Yeah, that’s important. After all, “Knowing is half the battle.” (Thanks to my childhood with G.I. Joe for that reference.) That’s all fine and dandy, but may not be all that motivating when life gets busy.
So let me give you two other reasons to be checking your credit report. (Spoiler alert: if you’ve been in class with me before, there’s a chance you’ve heard these. They’re just too perfect of examples not to use.)
Reason #1: Identity Theft
Yes, we all know it happens. Have you ever thought about who is most likely to steal your identity? Surely, with all of the technology out there, it has to be someone phishing from another part of the world, or at least someone hidden away in some basement somewhere else in the country.
Nope, it’s your family. Think about it. Who knows all of our information? Family. Who do we invite into our homes and give access to all of our information? Family. And because it’s identity THEFT, you have to file a police report to get it cleaned up. Who are we least likely to file a police report against? That’s right, family.
We had an individual come into our office years ago. They wanted to buy a new house, but the lender informed them that they would need to sell their other house first. As they looked into it, someone had bought a house in another part of the country in their name when they were an infant. They decided they were going to work around the issue with their credit report because it was a family member and they didn’t want to do that to family.
I’m not here to say whether that is right or wrong. That’s a personal choice we all have to make. But we have to know it’s an issue before we can even begin to process the decision. And you find things like that by checking your credit report.
Reason #2: Mistakes
These aren’t necessarily malicious actions. Rather, I’m talking about good-faith, non-nefarious errors that happen because neither humans nor computers are perfect. Perhaps easier to clean up than identity theft, errors can be just as damaging to your history.
I was talking with another individual outside of work. When you do what I do, it kind of draws related (or seemingly related) stories out of people beyond work hours. I’m glad this one came out.
This individual had checked out some materials from the local library. When they returned them (before the due date), the computers missed scanning the items as ‘returned’. While the materials were put back on the shelves, the computer system eventually registered them as late. After enough of a late-fee had accumulated, the system just set the fee at replacement cost.
Because it had gone so long and so high, the library reported the back fees to the credit bureaus. The individual had a note on their credit report that they owed the library $300. That’s enough to keep them from getting the mortgage they needed for their new house.
After a conversation with the library staff, they checked the shelves and, low-and-behold, there were the materials. So they checked the materials back in, removed the fees from the account, and removed the item from their credit report. Our library staff are generally very nice people. I enjoy chatting with them when I am at the library and they make it a pleasure to use the resource that our library is. They aren’t mean people that enjoy charging late-fees ‘just because’.
The replacement fee was just a mistake, but one that could have prevented a mortgage from happening.
The easiest way to check your credit report is by going to AnnualCreditReport.com. That’s the website the government has set up to guarantee you are getting your free credit reports. You can log in and request reports from one, two, or all three of the credit bureaus.
If you have a credit history, those reports are going to be long. There is a LOT of information in there. If you aren’t sure what it all means, the counselors at the Center for Financial Resources can help you out with that. Whether you bring in what you’ve printed or we pull it for you, we can walk through what it says, what it means, and what you might be able to do to improve it. Just go online or give us a call at 605-330-2700 to schedule an appointment.
Just be sure you check it. What you don’t know is on there may be scarier than the coming spooks of Halloween!
written by Breck Miller
images courtesy freedigitalphotos.net