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People often ask, “Why should I check my credit file?” Businesses, employers, banks, and government agencies interpret a person’s credit score as a barometer of how responsible they are. If you pay your bills on time, protect personal and financial information, and manage your finances in a responsible way, your credit score will be in good standing, and you will enjoy greater financial freedom.
What If My Credit File Shows That I Have Bad Credit?
There is peace of mind when you know that your credit score is in good shape. Failure to annually check your credit file could result in unknown damages, such as identity theft or incorrect information associated with your file.
“My credit file shows that I have poor credit. What does this mean?” The following are major downsides to having a low credit score.
- You will have a difficult time getting a loan or mortgage because you are deemed as a “higher risk” than someone with good credit. If you are able to get a loan or mortgage, your interest rate will be higher if you have bad credit.
- You may have a hard time finding employment, since many employers check applicants’ credit histories.
- You may have difficulty getting a credit card or even opening a checking or savings account.
- You may have a hard time renting an apartment or buying a home.
- Necessary payments, such as car insurance, will be higher if you have bad credit.
Since the downsides of bad credit are plentiful and impact one’s life in many ways, it is important to maintain a high credit score.
“My credit file shows that I have poor credit. What can I do?” Here are ways to raise or preserve your credit score.
- Pay your bills on time and in full. If you are more than 30 days late on a payment, it could negatively impact your credit score.
- Check your credit file every year to make sure that all information is correct and all accounts are in good standing (make sure that there are no errors or possible identity theft).
- If you see a problem or error with your credit file, address it immediately. The issue will not correct itself, and the longer the issue remains, the more your score will drop.
- If you misplace a credit or debit card, or it is stolen, call your bank and cancel the card immediately.
- Shred any personal documents that contain banking information and/or your Social Security number.
If your credit file is in good standing, and you take the necessary precautions to protect yourself from identity theft, you will enjoy greater financial freedom and fewer restrictions when applying for loans, mortgages, credit cards, insurance, and more.
