Not to belabour a point that we’ve made before on this blog, but if you are not keeping track of your credit rating you could be inadvertently cheating yourself and compromising your chances of achieving your financial goals. At worst you could be a victim of fraud and not even be aware of it until irreparable damage is done.
You probably already know that a good credit rating will generally get you the best offers and/or terms and conditions on everything from a mortgage to an auto loan, from a credit card to a personal loan. But as has been said about liberty, eternal vigilance is the price of a stellar credit record. Are you doing everything you can to monitor your credit and to improve it as necessary? Many people are not.
It’s never too late to start
Maybe you began this year with all sorts of resolutions to improve your life – including your money situation – and perhaps you’ve already broken most of those resolutions and you’re left feeling either a twinge of guilt or a sense of resignation. Better luck next year, right? Not so fast. It doesn’t matter what the calendar says; there is no time like right now to make one financial resolution that will be relatively easy to keep and profoundly beneficial to your financial well-being: start regularly checking your credit score and report.
Apps make credit tracking easier
Checking your credit report has gotten easier than ever. In addition to getting a free annual report from Experian, there are also free apps and websites available where you can check your credit score for free, or even calculate how much money you could save on loans, mortgages, and credit cards, just by taking steps to get your score improved.
You’ll be surprised how much money a good credit score can save you
You might be surprised to learn that according to a report by Creditscore, over the course of their lifetime, people who have great credit scores pay an average of £19,000 less in interest charges than people whose scores aren’t as stellar. That can be close to a year’s salary for many people.
Yet many people never check their score
Ironically, as important as having a good credit score is to a person’s financial well-being, the majority of consumers never bother to even check their score, probably because they think they have a good idea what their score is. The Creditscore report cited above noted that a third of these people were surprised to discover after checking their reports that their guess was off by over 200 points.
Failure to keep track of your score can cost you even more in the future
In addition to the potential savings and better loan terms enjoyed by high scorers, it is essential to regularly check your report in order to catch fraudulent charges, attempts at identity theft, and/or unauthorized applications for credit, before they can do further damage.
It is quite likely that your credit rating will be even more important in 2016 and beyond than it was in previous years. The US’ Fed has already announced its intent to raise the interest rate on the money lent to financial institutions in 2016, and the UK typically responds in kind with its own rate increases. Any expected rise in interest rates will inevitably increase the total cost of loans and other transactions, and people with mediocre or bad credit will be the hardest hit by the increases. This will especially impact their ability to be approved for zero percent interest rates and long payback terms on balance transfer credit cards. Clearly, the better your credit the less you’ll have to pay, both now and, to an even greater extent, in the long term.
No matter what happens with the interest rates, however, newer and more convenient ways of making purchases and payments mean that your sensitive information can be more vulnerable to hackers and identity thieves. Accordingly it is more important than ever to keep close track of your credit report. As easy as keeping track of your score has become, there is no excuse for not doing so, and every reason to make regular checks.