Keeping track of your credit report is a crucial financial habit, no matter what stage of life you’re in—from starting out to retirement. To make any solid financial plans, it’s essential to understand your current financial status. Regularly checking your credit report helps you see how well you’re sticking to your financial goals and how your efforts are affecting your credit profile. Personally, I make it a point to review my credit report once a year to stay updated on my credit score and overall rating.
I recently watched an episode of the Martin Lewis Money Show online, which covered this topic in detail. They featured everyday people with various credit report statuses and demonstrated strategies for rebuilding and improving credit scores. By following these strategies, potential borrowers can work toward a strong credit rating and better borrowing capabilities, just like the examples on the show. This journey begins with routinely checking your credit report.
### What’s in a Credit Report?
Your credit report mainly tracks your history of borrowing and repaying money, giving lenders an idea of the risk involved in lending you money for things like a car, house, or credit card. The report includes:
– Dates and amounts of previous loans
– Repayment terms and amounts
– Records of late payments
– Number of credit inquiries
– Judgements
Note that not all financial institutions report your transaction details, which may result in some exceptions in your credit report. Knowing what’s in your credit report before applying for loans is crucial, so you should review it regularly. Martin Lewis suggested either paying a £2 fee to get your report from a credit rating agency or signing up for a free 30-day trial of a credit rating service.
### Review Your Report for Personal Financial Planning
If you plan to set financial goals that involve borrowing money, understanding your credit standing is key. Whether you’re buying a car or house, attending post-graduate school, or starting a business, you might need a loan. Getting a copy of your credit report early in the planning process will help you map out the actions necessary to position yourself favorably for a loan if needed. Ignoring your credit status can lead to last-minute surprises that could derail your plans.
Knowing where you stand as a borrower is the first step to financial independence. Even if you don’t currently plan to borrow money, life changes might necessitate it someday. Ensuring your credit profile is appealing to lenders increases the likelihood of loan approval. Hence, regularly reviewing and monitoring your credit report is fundamental.