3 Ways Checking Your Credit Report Might Benefit You

It pays to give your credit report a read from time to time.

What's your favorite thing to do on a quiet evening? Chances are, it's binging a popular TV series or curling up with a good book. Reviewing your credit report, on the other hand, is probably not on your list.

But it's a good idea to check your credit report every few months. Doing so could result in the following three benefits.

1. You might get an early fraud alert

Even if you're a savvy consumer, all it takes is for a company to experience a data breach for you to fall victim to financial fraud. But if you check your credit report regularly, you might discover fraud before it impacts your credit for the worse.

Imagine that someone opens a credit card account in your name. What a criminal might do in that scenario is make a couple of very small charges initially to see if they can get away with that before moving onto bigger charges, like a laptop or TV.

If you check your credit report and notice a credit card account you know you didn't open, that will likely prompt you to investigate. In that situation, you might discover a fraudulent account when it has $15 of charges racked up against it, as opposed to $1,500.

2. You might get motivated to pay off some credit card debt

When you check your credit card balances individually, they may not seem all that high. But when you add them all together, that number may be more of a wakeup call.

When you review your credit report, you'll be shown how much of your available revolving credit you're using at once (that's known as your credit utilization ratio). And if that number is high, it could prompt you to come up with a debt payoff plan sooner rather than later. That could, in turn, help you accrue less interest on your debt. Plus, the less of a total credit card balance you maintain, the less damage you'll do to your credit score.

3. You might hang onto an older credit card instead of closing it

If you have a credit card you rarely use, you may be tempted to close out that account. But if you access your credit report and realize the card in question is your longest-standing account, that might prompt you to rethink those plans.

The length of your credit history plays a big role in determining your credit score. Keeping older accounts open can work to your benefit.

Don't neglect your credit report

You're entitled to a free copy of your credit report once a year from each of the three major reporting bureaus -- Experian, TransUnion, and Equifax. However, since the pandemic, weekly credit reports have been free, and that should last for at least the rest of 2022. Checking weekly is probably overkill, but pays to take advantage of that option and review your credit report every few months or so. Taking that step could spare you a world of aggravation in the event of financial fraud, and it might also inspire you to improve your financial picture by paying off debt and keeping long-standing accounts open.