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Why Do People Check Their Credit?

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If you don’t measure it, you can’t tell if it’s getting better. That’s a common concept when it comes to making improvements, whether in business, health or education.

The same applies to credit scores. It’s important to know your scores so you can make good decisions like when to apply for loans, but even if you’re not considering adding an account, it helps to know where you stand. Otherwise, you won’t know what changes you need to make in your financial behavior until it’s too late, like after you’ve been denied credit.

In a recent Credit.com survey, people most often said they decided to look at their credit scores so they could improve them. Of the 2,118 respondents to this survey, 44% were looking to increase their scores when they signed up for the Credit Report Card, a free tool that provides you with two scores used by lenders, and you can track how the scores change over time.

The Power of Knowledge

Interestingly, the second-most popular reason (40%) people gave for checking their credit scores was curiosity. The idea that people are curious about their credit shows that people know it’s important, but it also might indicate they’re not sure how to use the information credit scores provide.

Only 6% of respondents said they checked their scores because they wanted to know their status before applying for loans or credit. It may not be the most common reason, but it’s a useful one. Even if you can’t make dramatic improvements to your scores before you fill out a loan application, knowing your scores will give you a better idea of what financial products you may qualify for. Applying for something you can’t get only hurts your scores by creating more inquiries, so seeking new credit needs to be a strategic process.

Staying on top of your credit scores is also a good way to spot fraud. A sudden, unexpected change in your credit scores could indicate someone is using your personal information without your knowledge — someone could have stolen your Social Security number to open fraudulent accounts or gotten a hold of your credit card number and maxed out your card. While you should be monitoring your finances on a daily basis, regularly checking your credit scores gives you another way to protect your identity (3% of Credit Report Card users said that’s why they signed up).

Of course, if you apply for credit and are denied, you’re going to wonder why. Consumers are entitled to free credit reports when they’re denied credit, but looking at your credit scores could help you digest the information on your reports (that’s what they’re based on, after all). About 6% of respondents said they came to the Credit Report Card after getting rejected for credit, and with the information they reviewed, they can be better prepared to apply for credit the next time around.

More on Credit Reports and Credit Scores:

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Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

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The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

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Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

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Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

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