Posted by Francis Creighton
A friend of mine called me recently and told me he was thinking about refinancing his house to take advantage of lower interest rates. We talked about a few things as part of that, for example, he should get rate quotes from several lenders to shop around for the best deal. He should consider different products right now, including shorter terms (like a 15-year loan instead of a 30-year loan). And most importantly, stop everything and CHECK YOUR CREDIT REPORT NOW.
This first step in achieving a better financial standing and knowing what you may need to do to improve your credit, is critical to improving your financial situation. CDIA recently released a study on how credit reporting helps consumers and the economy, and one of the key points is how “Consumers who know their credit scores and reports are well prepared to judge credit in terms of real value, not just the putative benefits of a set of interest rates or fees as represented to them by parties with their own interests at stake in a transaction.” (Page 7)
Consumers should be checking their credit report at least annually, regardless of whether someone is anticipating a major financial decision. In fact, the major credit bureaus recently announced that consumers can access their reports as often as weekly.
But checking your report before applying for a loan is key. What if you didn’t realize that the department store card you opened ten years ago is still open? What if there is an error on your report? You want to be able to resolve these things before applying for a loan.
It’s easy to do. Just go to annualcreditreport.com. It is also available for free in lots of other places. But just do it – and then make it a regular practice to check it regularly.