The Importance of Your Financial Report Card (2024)

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I am all about living the debt-free dream, but there is still one thing that is extremely important, debt-free or not, your credit score and credit report. As a victim of identity theft, I can attest to importance of understanding and knowing what your credit score is. This is one of those bad money habits that you should avoid – not knowing your credit score and what your credit report says. Your credit report is your financial report card and is one of the most important financial documents you need to have.

When I was eighteen and dumb with credit, I made a shocking discovery. I was applying for yet another credit card (I already had five, did I really need another??? Oh right, I was broke), and they denied me because they claimed I had defaulted on several accounts.

Now, I may have been up to my eyeballs in credit card debt but I always paid the minimum payment. I did not understand what they were referring to and they would not provide any other details than I had defaulted on several accounts.

To Google I went, searching for free credit reports so I could determine just what in the heck had happened. Unfortunately, there were no free credit reports out there. They all gave you a free score and then charged you $14 a month when you forgot to cancel (I totally forgot to cancel….for three months).

When I received my “free” credit report, it was very confusing. I was totally lost in figuring out how to read it. Thankfully, a guy I worked with at the time used to work in collects and had experience reading credit reports. He looked over my report, told me my score was “fair” and that in 1998 I had taken out a mortgage, credit card, and car loan but never paid.

“Uhh…..I was in the sixth grade in 1998”, I replied. He told me that my identity had been stolen and they must have denied me for defaulting on those accounts. It was a total nightmare to figure it all out and get it situated.

This is why, even though I am an advocate of debt-freedom, I believe you need to know what your credit score is. You may not even realize that your identity has been stolen and trust me, it is a nightmare to get it all worked out.

Truth be told, I forgot all about this important step in money management until I read Financially Fearless *by Alexa von Tobel. She reminds you of the importance of knowing your credit score and understanding your credit report.

Thankfully, this time around I found a truly free site to check mine and my hubs’ credit reports – CreditKarma.com. We both have accounts with Credit Karma™ to help us manage our reports to help protect us against identity theft. Credit Karma™ provides us with our weekly credit score and report, credit monitoring and more — all completely free, which you know is my favorite word. (Please note, these screenshots are for “Veronica” – who does not exist, not me. 😉 )

With Credit Karma’s™ free credit monitoring, your credit report is monitored by Credit Karma™ on a daily basis, and they notify you of any significant changes on your report. Again, this is free, I definitely agree with both Dave Ramsey and Alexa von Tobel that you should not pay for credit monitoring services, especially since you can use a free service like Credit Karma™.

Credit Karma™ also has abundant tools and resources to help you fully understand your credit data and what impacts it — they want you to take control of your credit and finances, and they help you to do so. They really make understanding and reading your score and report easy.

Knowing your credit score and knowing what is on your credit report is very important to your financial health – debt or no debt. Your credit history will be pulled to rent an apartment or house and sometimes even for a job application. Make sure you keep up-to-date on your credit score and report so you do not miss any financial opportunities.

How often do you check your credit score and report?

Check back tomorrow for another post in our 31 Days of Real Life on a Budget series!

This is a sponsored post written by me on behalf of the Credit Karma™.

Linked Up To: Frugal Friday, Thrifty Thursday,The Thrifty Couple

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