If you haven’t looked at it yet, there’s at least one good reason why you will want to check out your credit report: identity theft. Identity theft can do a tremendous amount of damage to your life, and the longer it goes undiscovered, the more potential damage that can be done. When you have regular access to your credit report, identity theft is much less likely to happen, or at least to go on long enough to do any significant damage.
If someone steals your identity, there is a good chance that you won’t know it. They may lift your credit card numbers when you leave the card on a restaurant table. You might give up a password to the wrong person online without realizing it. The only way to protect yourself against these kinds of identity thefts is to be vigilant. However, your credit report can be an identity theft protection mechanism in itself. Just order a copy and look at your credit report. Identity theft should be obvious with the existence of credit card records for cards you do not hold, or loan information for a loan you do not have, among other things. Scour that report for any inconsistencies. Note if your credit score is much lower than you think it should be. See if there have been any loan requests on your account recently that you did not make. All of these can be indications of identity theft.
As soon as you see one of these discrepancies, you will want to report it to both the bank or credit agency and to the credit reporting bureau. They can immediately put a stop to any financial transaction that you did not authorize, and may be able to track down the source of the transaction and apprehend the identity thief. You are not responsible for any transactions that result from identity theft, but the sooner you identify an attack, the sooner you can clear up the issue and restore your reputation.
One credit report is not going to help you if someone tries to steal your identity after you get the report, but credit monitoring can. Credit monitoring services send you email alerts as soon as anything happens that significantly affects your credit report or credit score. After receiving an alert, you can investigate and see if this is a result of your own financial actions or if an identity thief might be at work. If you discover fraudulent activity, you can put a stop to it immediately, before any damage occurs, and you may even uncover the plot in time to catch the thief. These alerts can also help you even if you are not a victim of identity theft. When you have credit monitoring, you will know every time something you do affects your credit report or credit score, which can inform your financial decisions in the future.