Why Checking Your Credit Report Is Important for All Stages in Life

Published on Sep 09, 2015 06:56 am

Your credit profile is maintained by the three credit bureaus. It’s what you could call a living document. Each month, your creditors report how you’ve managed your financial obligations, and this information is reflected in your credit report. The information in your report is distilled into three-digit credit scores – typically the higher, the better. Creditors, lenders and other parties review these scores in their decision-making processes. And while credit scores are separate from credit reports, it is the information from these reports that represents your overall creditworthiness. Think about creditworthiness like a financial “x factor”: it has the potential to affect where you live and work, the kind of car you drive and the amount of interest you pay on loans.

While it’s important to keep an eye on your credit report throughout your life, certain major events require a preemptive review of information. Anytime you’re looking to make a major life change, review your credit report as far in advance as possible – preferably six to 12 months. This gives you the opportunity to rehabilitate any credit habits that might be working against you and time to address any suspicious activity that you might find on the credit report.

The three most important times to review your credit report are:

  • Moving Out on Your Own: You may enter the world bright-eyed and bushy-tailed, but poor credit can stop your goals in their tracks. Whether you’re renting your first apartment or interviewing for your dream job, credit can play a major part. Many landlords, and even some employers, review credit information when considering candidates. Be sure you know what they’ll find.
  • Growing Your Family: Once you find that special someone, your plans get bigger. First comes love, then comes marriage, then comes a whole new set of financial circumstances. As your family grows, you might think about buying a home, which often is the largest financial transaction of your life. Your credit plays a tremendous role in helping you qualify for a mortgage and determining the hundreds of thousands of dollars you will have to repay. A 1 percent or 2 percent difference in your interest rate can add up over time.
  • Your Golden Years: We’re living longer and, as a result, continue to rely on our credit as we age. Recently, the rules for reverse mortgages have changed. A reverse mortgage is a financial tool available to people over the age of 62. Homeowners can tap into the equity of their home and receive monthly payments to help them manage costs in retirement. As of March 2015, the Federal Housing Administration requires all reverse mortgage applicants to undergo a financial assessment closely resembling the traditional mortgage underwriting process. As one of the last major lending agreements you’ll get into, you’ll want to make sure your credit is in top shape.

From the time you enter the workforce until you head into retirement, credit plays an important role. No matter where you are in life, reviewing your credit report is a wise decision.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from ConsumerInfo.com, Inc., an Experian company. © 2015 ConsumerInfo.com, Inc. All rights reserved.

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