We live in a scary, digital world. One in which virtually every financial transaction we make can be tracked in some capacity. A world where a simple shopping trip can turn into a loss of privacy, or a momentary lapse in good judgement can hinder prosperity for years. Credit reports play a critical role in this digital environment, but a surprising number of people don’t appear to think so.
Despite headlines filled with data breaches and identity theft incidents, Americans still underestimate the importance of their credit reports. According to a new survey from Credit.com, 34% of Americans have never thought about checking their credit reports, while 26% do not consider them important enough to check. In fact, nearly 40% of millennials, who are often seen as the digital generation, don’t even know where to obtain their credit reports. Almost a third of respondents believe that as long as they pay their bills on time, there’s no need to check their reports.
What is a credit report? A credit report contains a significant portion of your financial activities, including how you pay your bills and whether you have been sued, arrested, or have filed for bankruptcy. It contains personal information such as where you live and helps create your credit score. While these reports are typically thought of as a part of the lending process, they are used by a variety of entities.
Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. If you notice unusual activity on your credit report, it may also help you identify fraud.
Having an accurate, favorable credit report can save you money when shopping for loans or insurance because you may be deemed more credit-worthy, resulting in lower interest rates and premiums. It can help you secure a job, since a growing number of employers are requesting to see your credit report in hopes of learning more about your character. Unfortunately, errors or signs of fraud are not uncommon in credit reports, and it’s up to you to take corrective action.
A 2013 report from the Federal Trade Commission found that one in five consumers had an error in at least one of their three credit reports. “These are eye-opening numbers for American consumers,” said Howard Shelanski, director of the FTC’s Bureau of Economics. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
Americans looking to check their credit reports and make sure they’re accurate should use AnnualCreditReport.com. It’s the only authorized site that is required by law to provide a free copy of your credit report every 12 months from each credit reporting company. If you need to dispute your credit report, more information can be found on the FTC’s website. In order to help consumers better understand how to read their reports, Credit.com has also launched a new interactive guide.
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