Why Checking Your Credit Report Is One of the First Financial Moves You Should Make in 2023

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  • The start of the year is a great time to tackle different financial tasks.
  • It's important to check your credit report on the heels of holiday shopping.

Make a point to tackle this key task in January.

There are certain money moves it usually pays to make at the start of the year. For one thing, it's wise to assess your emergency fund and see how equipped you are to tackle unplanned bills. You should also sit down and map out a budget that allows you to cover all of your expenses while meeting different savings goals.

But perhaps the first financial move you should make in early 2023 is to check your credit report. Here's why.

See how things stand after the holidays

A lot of people tend to overspend on the holidays. You may be aware that you're carrying some debt on your credit cards. But you may not realize just how much debt you've racked up. Looking at your credit report will give you a sense of whether your debt is likely to cause credit score damage, which is something you don't want.

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If you rack up credit card balances that amount to more than 30% of your total spending limit across your various credit cards, it could cause your credit score to take a dive. And that's something your credit report can tell you.

Also, if you swiped your credit card more often during the holiday season or engaged in more financial transactions than usual, you may have potentially exposed yourself to fraud -- not because you did something wrong, but because there are unfortunately just scammers everywhere. If you check your credit report and see suspicious activity, you'll know to address it before the situation escalates.

For example, let's say you notice a new line of credit listed on your credit report that you don't recognize and are certain you never opened. That should be a red flag to follow up. If it turns out a criminal got access to your personal data and opened an account in your name, you'll know to address that issue and nip the situation in the bud.

A move you don't want to put off

In 2023, credit reports will be available for free on a weekly basis. That benefit was initiated during the pandemic and got extended to allow consumers to keep track of their credit.

Before you get too wrapped up in different 2023 goals and happenings, take the time to give your credit report a thorough read. And if anything looks off to you, don't hesitate to investigate.

One thing you should know is that credit report errors are actually pretty common. So if you see something that doesn't look right, it doesn't automatically mean you've fallen victim to fraud. It could just be that the credit bureau that put together your report has made a mistake. But either way, that's still a situation you'll want to correct, and the sooner you do, the better.

Finally, if you're planning to apply for a loan in 2023, whether to buy a car, a home, or something else, it's really important to go in with good credit. If your credit report presents you as a borrowing candidate with lots of debts and a poor payment history, your chances of getting approved for a loan will shrink. Reading your credit report could be the push you need to improve your credit picture and put yourself in a better position to be able to borrow the way you want to.

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