Credit Report: How To Understand Your Credit Report

Credit reports include a financial history of you. Credit is a topic that is discussed frequently: credit reports, credit ratings, credit freezes, and credit monitoring. For you, what does all of this mean? Due to its impact on obtaining loans, employment, housing, insurance, and other things, credit is important. It’s critical to comprehend what your credit is and how to safeguard it.

What’s credit, and Why Is It Important?

Your credit history is what people mean when they discuss your credit. Your past credit history reveals your financial habits. For instance:

In what number are your credit cards?
How much debt do you owe?
Are your bills paid on schedule?

Lenders will use your prior financial behavior to determine whether or not to extend credit to you. They can also decide what interest rate to charge you based on your credit history.

Lenders will tend to feel more comfortable doing business with you if they observe that you consistently pay your payments on time and never take on more debt than you can repay.

They may lose faith in you if they discover that you are in arrears on payments or that you owe more on credit cards or loans than you can repay.

A credit score: what is it?

A credit score is a figure that is determined by using data from your credit report. It assists companies in estimating the likelihood that you will return a loan and complete the required payments on time. Although there are many various scoring models available, the FICO score is what most lenders utilize.

Companies first obtain data from your credit record to determine your credit score, such as

the amount of money you owe
if your payment was made on schedule or not
the duration of your credit
the amount of fresh credit that you possess
whether you have lately requested new credit

The credit behavior of persons with comparable profiles is then compared by corporations applying a statistical algorithm to this data. The statistical program gives you a score based on this comparison. The typical range for credit scores is 300–850. Because companies view you as less of a danger, you have “good” credit if your score is higher. As a result, you are more likely to be granted credit or receive lower-cost insurance. You will likely face greater interest rates on any credit you obtain if you have a low score, as this indicates that you have what companies refer to as “bad” credit, making it more difficult for you to obtain a loan or credit card.

Your credit history is irrelevant to whom?

Several entities, including insurance providers, landlords, lenders, and prospective employers, may review your credit history. The impact of your credit history might be significant when you

Apply for a credit card or loan.
search for employment
Try to get an apartment.
Try to purchase or rent a vehicle.
Try to obtain house or rental insurance.

You should probably be concerned about your credit because these lenders, landlords, and other people have an interest in how you manage your bills and other financial matters.

Information on your credit report may be sold by credit bureaus to:

Creditors
Prospective employers
Insurance providers
Owners of rental properties

Your credit record may be used by these companies to determine your eligibility for:

Give credit
Credits
Leases for rental properties
Workplace
Protection

Your credit report contains what?

Your credit history is condensed into your credit report. TransUnion, Equifax, and Experian, the three national credit bureaus, gather credit and other personal data about you. Your credit report contains details such as

Name, address, Social Security number of the individual
The credit cards you own
Your credit
Whether you pay your payments on time or late, and how much money you owe
If you declared bankruptcy

Companies pay credit bureaus to use their data for credit checks. For example, they examine your credit before approving a loan, granting you a credit card, or renting you an apartment.

Verification of the accuracy of the data the credit bureaus gather about you is a requirement. Federal law mandates this under the Fair Credit Reporting Act (FCRA). To make sure all the information is correct, you should, however, routinely review your credit report. You are free to contest any errors you uncover.

What details can’t you find in your reports?

You cannot obtain credit ratings from your credit reports. But your scores are shaped in part by the data in your reports. The following is what else is missing from credit reports:

Compensation

Though it does not affect your credit ratings or credit reports, your wage has a significant impact on your day-to-day existence.

Status of employment

Your employers may be listed on your credit report, but it is not stated when or whether your work ended. The data comes from previous credit applications you have submitted and is used for identification purposes.

Credit history of the spouse and marital status

Your spouse’s credit will not impact yours; you will each have separate credit reports. However, be aware that joint accounts, such as credit cards or mortgages, appear on both credit reports, and errors like missing payments may have an impact on both of you.

Resources

Your credit reports do not include information about your bank balances, brokerage accounts, investments, or retirement accounts like 401(k)s.

Loans from 401(k) plans

Your credit reports don’t reflect loans made to you personally. (However, other considerations make 401(k) loans less desirable, one of them being that they may reduce your retirement funds.)

If you see mistakes, challenge them.

Collect evidence to support your claim if you find errors that could be affecting your scores. Errors on your credit report that the credit bureau displays can be disputed. Copies of the documentation establishing your identification and explaining why the item is incorrect must be provided. When the bureau receives your credit report from AnnualCreditReport.com, it has thirty (30) days to look into it and reply, or forty-five days if you file a dispute. During the 30 days, submitting fresh data or supporting documentation may also result in a 15-day extension.

How to obtain a copy of your credit report

Every year, you are entitled to a free copy of your credit report from TransUnion, Equifax, and Experian, the three national credit bureaus. To help ensure they get accurate information and to keep an eye on your reports, several financial experts advise spreading out your requests over a year. Obtaining a free credit report is best done by

Visit the website AnnualCreditReport.com.

Call 1-877-322-8228 for the Annual Credit Report.

Moreover, the three credit bureaus have perpetually renewed the free weekly credit report checker service at AnnualCreditReport.com.

And everyone in the U.S. can get six free credit reports per year through 2026 by visiting the Equifax website or by calling 1-866-349-5191. That’s in addition to the one free Equifax report (plus your Experian and TransUnion reports) you can get at AnnualCreditReport.com.

How to find your credit score

There is no free annual credit score, in contrast to your free annual credit report. You may be eligible for free credit ratings from certain businesses you do business with. If you register for a paid credit monitoring program offered by another company, you might be eligible for a free credit score. This type of service looks up information on your credit report. There are situations when it’s unclear how much the credit monitoring will cost you. Thus, be sure to thoroughly examine any offers for free credit scores to determine whether you’re also being billed for credit monitoring.

How may my credit report be viewed?

Using AnnualCreditReport.com or a personal financial website like NerdWallet that offers free credit report details, you may request your free credit reports from the three major bureaus. Direct access to your Spanish credit record is available from the credit bureaus. After that, go over the data and look for any errors.

What does my credit report’s coded information mean?

Reason codes that provide information about your credit score may occasionally appear in your credit report, particularly if you have recently had a credit application denied. One such instance would be 87: Unpaid collections. For the two main rating companies, VantageScore and FICO, the codes are distinct. VantageScore lets you look up codes, their definitions, and advice on how to improve your score using ReasonCode.org.

Items that appear on a credit report?

Your personal data, accounts, credit queries, and any negative marks you may have, such as bankruptcies, are all included in your credit report. Although the presentation of your reports may alter, the data should be the same in all three.

The significance of credit reports

Credit reports provide a crucial overview of your financial situation. Your credit score affects your eligibility for credit cards, insurance, and interest rates, and it can make or break your prospects of getting a mortgage.

You’re more likely to be granted better loan terms, such as a low-rate mortgage or a bigger credit limit on a credit card, and banks and lenders will be more inclined to approve your credit applications if you have strong credit. You’re more likely to get an apartment from a landlord if your credit is good.

Your selections for credit cards will be more restricted if you have bad credit. You will also likely pay more for insurance and interest rates, and you won’t be able to take advantage of the perks that come with the very best credit cards. Not being able to rent a property, paying more upfront, or needing a co-signer with excellent credit are all consequences of having bad credit.

Understanding your credit report allows you to know where you stand and focus on improving your credit score. Regularly examining your credit report, at least once a year, allows you to remedy any problems and ensure that it accurately represents your financial condition.

Dispute credit report mistakes.

Experian, TransUnion, and Equifax all allow online disputes. You can quickly enter your information online, or dispute it by letter or phone.

Equifax: You can file a dispute online or by mail to Equifax Information Services, LLC at P.O. Box 740256, Atlanta, GA 30374-0256. Dispute over the phone at (866) 349-5191.
Experian: You can use the toll-free number on your credit report to raise concerns about information either online or over the phone. You can address your dispute to Experian at P.O. Box 4500, Allen, TX 75013.
TransUnion: TransUnion Consumer Solutions, P.O. Box 2000, Chester, PA, 19016-2000; via mail; or by calling the toll-free number (800) 916-8800. Don’t forget to fill up and submit the online request form.

View the response from the credit bureau.

Any information deemed to be false, incomplete, or unreliable must be removed or changed from your credit report within 30 days according to the Fair Credit Reporting Act (FCRA).

Resolving errors in your credit history

Your credit report contains information that impacts many other significant aspects of your life, such as your ability to obtain an apartment or a loan. Make sure everything in your report is accurate. The credit agency and the individual, business, or organization who submitted inaccurate information to your credit report are equally accountable for fixing any errors you identify. But first, there are some things you must do:

If your credit report contains errors but you have not been the victim of identity theft, you should first formally notify the credit bureau of any information you believe to be false. Provide copies of any supporting documentation for your claims. Your claim needs to be looked into by the credit bureau. It must also get in touch with the company that uploaded the data to your report. (For instance, the credit bureau will get in touch with your phone carrier if the incorrect information relates to your cell phone bill.) Should the business discover that the data was, in fact, false, it is required to notify all three credit bureaus to update your record.

Second, get in touch with the business that provided the credit bureau with false information. Put this in writing. Inform them that you would like to dispute a credit report item. Obtain additional details and an example disagreement letter.

You have the option to prevent charges resulting from identity theft from showing up on your credit report if it contains inaccuracies. Visit IdentityTheft.gov to get started. This FTC website will lead you through each stage of a personalized rehabilitation plan. In addition, you will receive an Identity Theft Report that you can utilize to prove that the debts resulting from identity theft are not yours.

How Can Your Credit Be Safeguarded?

Credit freezing

You can restrict who has access to your credit report for free by placing a security or credit freeze. You might wish to freeze your credit report if you are concerned about someone using your credit without your consent, such as an identity thief or a hacker following a data breach. It’s more difficult for someone else to register new accounts in your name when there is a freeze. Additionally, since many banks and lenders run credit checks before accepting new accounts, you’ll need to temporarily lift the freeze if you seek credit.

Observations regarding credit freezes include the following:

Stop fraud from happening

There is no impact on your credit score from a credit freeze.

You can still obtain your free yearly credit report even if you have a credit freeze in place.

Make a fresh account. Simply remove the freeze for a moment to open one. Lifting the freeze costs nothing. Once you are no longer required by lenders to view your credit, you can re-add it.

Hire someone, rent a place, or get insurance. These acts are not covered by the freeze, thus there’s no need to lift it.

A thief can still place charges on your active accounts even if your credit is frozen. It is still your responsibility to keep an eye out for unauthorized expenditures and changes on your credit card, insurance, and bank statements.

Get in touch with each of the three national credit bureaus to apply a free credit freeze on your credit report:

Equifax

Equifax.com/personal/services/credit-reports

Call 1-800-685-1111

Experian

Experian.com/assistance

Contact 1-888-EXPERIAN (888-397-3742).

Transunion

TransUnion.com/credit-assistance

1-888-909-8872

The credit bureaus must impose the freeze within one business day of your request, whether made over the phone or online. In addition, they have one hour to lift the freeze. The credit bureau must impose or remove the freeze within three business days if you submit the request via mail. Keep in mind that you must speak with each of the three bureaus. Take a look at What To Know About Credit Freezes and Fraud Alerts for additional information on this topic.

Observe your credit record.

Your credit report has an impact on your ability to obtain loans, employment, housing, and other opportunities, so you want to make sure that it is accurate and that no one has been abusing your data. There are multiple ways to accomplish this:

For free, keep an eye on your credit report. Get your free credit report and check it over to make sure there are no errors or concerns. Search for items such as:

Information from another person in your report
Details from a long time ago about you, preferably more than seven years ago
Details regarding your payment history or incorrect accounts
Accounts that you did not open yourself could indicate that your identity has been stolen.

Take action to correct anything you discover that shouldn’t be on your credit report. Refer to the “Fixing mistakes in your credit report” section below.

After a data breach, accept the offer of free credit monitoring. Numerous businesses will provide you with free credit monitoring if a data breach results in the exposure of your information. Make the most of it. This is your chance to obtain free assistance monitoring your credit report and ensuring that no one is abusing your data. Visit IdentityTheft.gov/DataBreach for further details on what to do if a data breach exposes your personal information.

Members of the National Guard and active duty military are eligible for free electronic credit monitoring. Get in touch with the credit bureaus to enroll.

Purchase a credit monitoring plan. Typically, there is a monthly or yearly price for these services. They monitor your credit record on your behalf and notify you of any unusual activity. Before considering paying for these services, keep in mind that you have the option to freeze your credit for free and can keep an eye on your credit by receiving your free credit reports.

To avoid any surprises, it’s crucial to check in frequently with your credit, whether you do it yourself, receive free credit monitoring, or hire a firm to do it for you. Read more about credit monitoring in the article What You Should Know About Identity Theft.

Conclusion

Gaining an understanding of your credit report will help you keep your credit score high and learn how to build credit. Regularly checking your credit reports is necessary to detect possible fraud and identity theft. You can make better decisions regarding your borrowing habits and expenditures when you know why it’s critical to examine your credit report and how to interpret it.