A message we consistently emphasize is the importance of regularly checking your credit reports. The main advantage of developing this as a routine practice is that you can spot evidence of fraudulent activity sooner and then take immediate action to rectify the issue.
Although, it's important to understand that the influence of an accurate credit report extends beyond the management of your personal finances. Your credit history, for better or worse, is often perceived as judge of your character, and financial institutions are not the only institutions that look to your credit report when making consequential decisions that can impact your livelihood. Others that use this information are:
Prospective Employers: In Virginia, it is legal for an employer to look at a job applicant’s credit history even if the job in question does not require sound financial habits. Employers are not entitled to the full report and the Fair Credit Reporting Act does require employers to get the applicant’s permission to view the reports. However, these restrictions notwithstanding, a credit report with erroneous information can negatively impact one’s chances of getting hired.
Landlords: Similar to employers, landlords must get your permission to view your credit reports. Unlike employers, once that permission is granted, landlords can see the full report. Timely and consistent payments are important for landlords and a bad credit report often reflects the opposite. If you are unaware of the errors on your report, you may be denied a lease that you would otherwise qualify for.
Insurers: An insurer’s interest in credit history is linked to a credit-based insurance score that is generated by FICO and VantageScore. The factors that generate credit scores are similar to those that generate credit-based insurance scores. As the name suggests, credit-based insurance scores, which inform the cost of your insurance plan, are related to your credit history. This means that an error on your credit report can potentially lead to higher insurance premiums.
Importantly, regardless of the legality or appropriateness of these practices, it’s safe to assume that your credit report and history will to some degree influence the decisions of these institutions. It is vital that you make reviewing your credit reports a routine habit and take immediate action on any erroneous information.
If you have any questions about your credit reports, please contact us.