Your credit history report shows how you handle credit, pay bills, and manage finances, which is important when getting a loan, finding a job, or renting a home. Contrary to what some people think, checking your credit history doesn’t hurt your credit score. Routine checks, called “soft inquiries,” give insights into your financial situation and help you fix any problems early on. We’ll explore five clear reasons why these checks matter to help you understand their role in your financial journey.
1. Protection Against Identity Theft
Identity theft is a serious threat today, especially since all our sensitive data is stored online. Criminals can steal your info to open bank accounts, take out loans, and even buy stuff in your name, leaving you with a huge debt you never made.
When you regularly check your credit history, you’re looking out for anything unusual or unauthorized that might signal someone trying to steal your identity. If you notice sudden drops in your report after a credit history check Philippines, it could be a sign of trouble, so investigate any significant changes.
2. Loan Approval and Interest Rates
Creditors will always check your credit history to determine if you’re someone they can trust to pay back the money they lend you. If you’ve been good at handling your money, like paying bills on time, it increases your chances of getting approved for a loan.
Lenders also use your credit history to decide how much interest to charge you for each loan. If you’ve been responsible with money, you’ll get lower interest rates but if your credit history has issues, they may render you a risk and ask for higher interest rates.
3. Employment Opportunities
Jobs involving money, like in finance or banking, commonly use credit checks because employers believe your financial habits might show how you handle financial tasks at work. Government positions and jobs with security clearances also often include credit checks to ensure employees can be trusted. Employers should tell you if they plan to check your credit, and they can’t use it as the only reason for not hiring you. Some countries even have additional rules about using credit history in employment decisions.
4. Access to Better Credit Limits
When you apply for a credit card, the company looks at your credit history to see how you’ve handled credit before. If you’ve been responsible, paying on time, and not maxing out your cards, you’re likely to get a higher credit limit. On the other hand, a not-so-great credit history might mean a lower limit because they see you as a risk.
Having a higher credit limit on your card can help in emergencies, providing a financial cushion for unexpected costs. It also improves your credit score by lowering the ratio of what you owe to your credit limit.
5. Renting a Home
When you want to rent a home, landlords usually check your credit history to know if you’re likely to be a good tenant who pays rent regularly. If your credit history isn’t great, they might worry about your ability to manage money. This leads to fewer rental options, requests for bigger deposits, or the need for someone with better credit to co-sign.
If your credit history isn’t perfect, let landlords know. Explain any reasons behind it and share your plan for paying rent on time. Offering references can show you’re reliable, and talking about your stable job and income reassures landlords about your finances.
Checking your credit history regularly is more than a good practice—it’s essential for a healthy financial life. To make this a habit, consider a free credit history check Philippines to stay well-informed and prepared for the opportunities ahead. Your financial well-being starts with this simple, proactive step.