Have you checked your credit report lately? If not, what’s keeping you from doing so? A recent survey by WalletHub found several reasons, ranging from complexity to fear.
Your credit report is a history of all your loans and credit transactions as reported to the credit bureaus. The information in your credit report is used to determine your credit score. Both are evaluated by lenders when they are deciding whether to lend you money, and how much to charge you for the privilege.
Errors on your credit report or fraudulent accounts opened in your name can cost you dearly. If you don’t check your reports regularly, you may not know of any problems until your credit is ruined and bill collectors try to collect unauthorized debts in your name.
Why wouldn’t you check your report? It’s free at MoneyTips! The survey reveals that many Americans find a credit report hard to read and don’t fully understand what’s in the report, or the importance of it – and would rather do other things.
When asked about certain documents they would rather read, 17% of the respondents chose credit reports – below reading work e-mails (39%) and college textbooks (31%), but above reading appliance manuals or phone books (assuming you can still find either one). Another 3% even preferred reading tax code (clearly, they were accountants).
Only 40% of respondents found credit reports hard to read, but just over three-quarters of respondents said that credit reports should be simpler and 68% said they would check their report if the presentation were simpler. MoneyTips presents a very colorful, interactive version of your credit report for easy reading. Meanwhile, 80% preferred that a summary of important changes be included in a full credit report, and 58% wanted to see every detail on their credit report.
In short – I want to know everything about my credit, but I want to have it explained to me in simple terms. Explanations of credit reports are readily available, but people may not be aware of them or not motivated enough to consult them.
Many respondents were confused about what’s included on a credit report. Most correctly identified credit card accounts (92%), bankruptcies (69%), and mortgage loans (68%). Many erroneously included checking accounts (39%), income (37%), or retirement accounts (19%). We’ll give a pass to the 55% who said tax liens are included, as they were removed via recent regulatory changes – and maybe to checking accounts, which can be reportable if overdraft protection is used.
Only 41% of survey respondents check their credit reports more than once per year, although over twice as many (84%) know that they should. Over one-quarter (27%) of respondents claim they don’t have time to check credit reports more often, and 35% don’t want to pay for credit reports (not understanding that free credit reports are available). Another 14% are afraid to see what’s on their report, and 24% simply don’t care.
The WalletHub survey results translate to a lot of misunderstanding, apathy, and fear about credit reports. Credit reports are too important to let fear and a lack of knowledge stop you from assessing your true credit situation. Use the many resources that are available to help, either online or face-to-face through credit counselors and financial advisors.
Don’t put your credit report aside simply because you’re afraid of the results, don’t have time, or find them too complicated. What you don’t know really can hurt you.
You can check your credit score and read your credit report for free within minutes by joining MoneyTips.