Why is it important to check your credit report, and how often should you review it?

• A. To close unused accounts automatically; you should never check it.
• B. To increase your credit score automatically; you should check it monthly.
• C. To avoid paying taxes; you should check it every five years.
• D. To detect errors or fraud early; you should check it at least once a year.

Answer: (D)

Verified step by step guidance

1. Understand the purpose of a credit report: A credit report is a detailed record of your credit history, including loans, credit cards, payment history, and any outstanding debts. It is used by lenders to assess your creditworthiness.
2. Recognize the importance of checking your credit report: Regularly reviewing your credit report helps you detect errors, such as incorrect account information or payment history, and identify potential fraudulent activity, such as unauthorized accounts or transactions.
3. Determine the recommended frequency for checking your credit report: Financial experts suggest reviewing your credit report at least once a year to ensure accuracy and protect against identity theft or fraud.
4. Learn how to access your credit report: In many countries, you are entitled to a free credit report annually from major credit reporting agencies. For example, in the U.S., you can access your report through AnnualCreditReport.com.
5. Take action based on your review: If you find errors or signs of fraud, report them immediately to the credit reporting agency and the creditor involved. This helps maintain the integrity of your credit history and prevents further issues.