Keeping an eye on your credit report is a crucial financial task at every stage of life, from just starting out to retirement. Serious financial planning begins with understanding your current situation. Regularly reviewing your credit report helps you see how well you’re sticking to your goals and the impact of your efforts on your overall credit profile. Personally, I check my credit report at least once a year to stay aware of my credit score and overall rating.

I recently watched an episode of the Martin Lewis Money Show that covered this topic in detail. The show featured several ordinary people with different credit report statuses and demonstrated how to rebuild and improve their scores. These techniques can help potential borrowers develop a plan for a strong credit rating and increased borrowing capacity, as illustrated by the case studies on the show. The first step in this plan is to review your credit report regularly.

Your credit report generally details your history of borrowing and repaying money, providing lending institutions with an idea of the risk they take if they extend you a loan for things like a car, house, or credit card. The report usually includes:
– Dates and amounts of previous loans
– Repayment terms and amounts
– Records of late payments
– Number of credit inquiries
– Judgments

Not all institutions you’ve dealt with may report your business dealings, which means some information might not appear on your report. It’s essential to know what’s on your credit report before applying for loans, so you should review it. Martin Lewis recommended doing this by either paying a £2 fee to see your report from a credit rating agency or signing up for a free 30-day trial of a credit rating service.

When setting financial goals that might involve borrowing money, it’s crucial to monitor your credit standing. Whether you’re buying a car or house, attending graduate school, or starting a business, you may need a loan. Getting a copy of your credit report early in the planning process helps you outline the steps necessary to position yourself favorably for borrowing when needed. Ignoring your creditworthiness can result in old derogatory information surfacing and disrupting your plans.

Understanding your standing as a borrower is the first step to financial independence. Even if you don’t plan to borrow money immediately, you want to ensure your credit profile is attractive to lenders should the need arise. Having a clear view of your financial position is the primary reason to regularly review and monitor your credit report.