You may not be aware of it, but your credit score plays a vital role in your life. It influences most of your financial options; from being approved for credit cards and the amount of interest you pay on a loan, to being accepted by a landlord to rent your dream apartment.
Your credit score is not a static number since it changes over time, based on several factors and your financial behaviour.
Here are a few reasons why monitoring your credit report regularly is a good idea.
You can immediately spot possible identity theft
A growing number of Australians are becoming victims of identity theft. Cybercriminals hack into secure databases and use cloning technology to steal credit card details and personal information. If scammers are able to get a hold of your data, they can use your credit card information to purchase goods and your personal information to apply for money from lenders.
If successful, the loan will be approved and the criminals will take the money with no intention of repaying the money.
Being unaware of having your personal information stolen can lead to nasty surprises. Take the lender for example – they will chase you for repayment on the loan that was taken out in your name. Your credit score may also be negatively affected if the lender reports missed/late repayments on the loan that have been taken out in your name.
Monitoring your credit report will help you avoid such issues by setting up alerts when a new credit account is opened. If the account was not opened by you, you can take proactive steps to inform the credit provider and close the account.
You can easily find errors in your report
Your credit report data includes your personal information, credit accounts in your name and your repayment history. This information is factored into the calculation of your credit score by credit bureaus. However, the credit bureaus are not immune to mistakes and may have incorrect personal information on record. Errors in the information can be significant enough to affect your credit score.
In Australia, you are eligible for a free credit report annually from each of the three credit reporting bureaus. Make sure to maximise this benefit to help you monitor your account. There are also a lot of free financial tools that allows you to monitor your credit score even on a daily basis. We have created a listicle on the free and paid credit checking tools you can use, together with its pricing details and other relevant information.
💡💡Did you know that incorrect information can be removed from your report by contacting the specific bureau where you saw a report error? But you need to be active in identifying the errors.
Helps inform you on the best time to apply for a new loan
A good credit score can open the door to better financial offers. For example, premium credit cards with excellent reward programs are only offered to customers with high credit scores. You will know whether you are eligible to apply for such offers by monitoring your credit report.
If your credit score is too low you should avoid applying now and take steps to improve your score so that you have a better chance of being approved in the future.
Get visibility on who is looking at your information
You may be surprised at the number and type of companies who request to review your credit report. Having alerts set up to notify you of credit requests will provide a picture of who is looking at your report and why. Most of the requests are legitimate but you are in your right to query those that appear suspicious. Remember, too many credit requests in a short period of time can reduce your credit score.
