For many people, “credit” is a scary word. It brings to mind every bill, payment, and setback they’ve had over the last few months. Fortunately, though, credit doesn’t have to be a terrifying word.
People often panic over this word because they don’t check their credit score often. Some sources recommend checking your score at least once a year. However, checking it more frequently gives a clearer understanding of your credit.
Instead, make a habit of regularly monitoring your personal credit history. By doing so, you become a better candidate for securing a car loan and other large purchases. If that doesn’t incentivize you, read about the five other top advantages to monitoring your credit history!
- You Can Spot Fraud in Your Personal Credit History
Several types of identity theft exist, but one of the most damaging types occurs through someone applying for credit in your name.
Professionals refer to this type of fraud as “new-account fraud,” a crime that resulted in $4 billion losses in 2019. When somebody succeeds in creating a new account, you’ll see the new information in your credit reports.
If you keep up with your personal credit history, you can identify the fraudulent account. From there, you can freeze your credit reports and work with credit bureaus to have them removed.
- Checking for Inaccuracies
Although it’s more of a rarity, sometimes creditors report inaccurate information to a credit bureau. Alternatively, the credit bureau may accidentally include inaccuracies in your credit report.
If the inaccuracy is negative information, it can damage your chances of getting a refinance car loan. Fortunately, you can dispute unsubstantiated items in your report. If the bureau validates your claim that this item shouldn’t be there, they’ll remove it.
- Learn How Your Actions Affect Your Credit
Generally, credit scores account for five factors:
- Payment history
- Total amount owed
- Length of credit history
- Credit mix
- Pursuit of new credit
As you monitor your credit, you’ll eventually see how your actions affect your score. Hopefully, you’ll see your credit improve over time, allowing you to apply for this type of loan.
- Always Ready for New Credit
Many people fail to realize why credit history matters when they apply for auto loans. Any loan you receive is ultimately new credit in your name. If you don’t have a reliable credit history, new creditors won’t trust you.
If you keep up with your credit history, you’ll be in a better position to acquire a loan. You can use a car loan calculator to learn what loans you can apply for.
- Knowing When You Qualify for Better Offers
When you regularly monitor your credit score, you can watch as it improves over time. From there, you can determine when you might receive a better offer for auto loans. You may find that you can get a pre-approved car loan, for example, instead of searching for car loans for bad credit.
Start Monitoring Your History Today
Taking control of your personal credit history is a critical step forward for financial freedom. So, don’t hesitate. Start monitoring your credit history today!
We hope you enjoyed this article! If so, check out our other content today.