Credit Report
What is a Credit Report
A credit report is a detailed summary of your credit history, compiled by a credit bureau. It contains information about your credit activity and current credit situation such as loan payment history and the status of your credit accounts. Most people have more than one credit report.
Why Credit Report is Important
Credit reports are important for several reasons:
- They provide the basis for your credit score, which lenders use to decide whether to offer you a loan or credit card.
- They can impact many areas of your life, such as your ability to rent an apartment, buy a house or car, get a loan, and even be hired for certain jobs.
- When filled with positive information, a credit report helps you put your best face forward as a responsible borrower who knows how to manage their finances.
What Information does the Credit Report contains
A credit report typically contains the following information:
- Personal Information: Your name, any name you may have used in the past in connection with a credit account, current and former addresses, birth date, Social Security number, phone numbers.
- Credit Accounts: Current and historical credit accounts, including the type of account (mortgage, installment, revolving, etc.), the credit limit or amount, account balance, account payment history, the date the account was opened and closed, the name of the creditor.
- Collection Items: Missed payments, loans sent to collections.
- Public Records: Liens, foreclosures, bankruptcies, civil suits, and judgments.
- Inquiries: Companies that have accessed your credit report.
How to Obtain Your Credit Report
You can obtain a free copy of your credit report every 12 months from each of the three major consumer reporting companies (Equifax, Experian, and TransUnion) by visiting AnnualCreditReport.com. You may also be able to view free reports more frequently online.
How to Correct Credit Report Inaccuracies
Inaccuracies in your credit report can cost you thousands of dollars over time due to higher interest rates and insurance premiums. Therefore, it’s crucial to regularly check your credit reports for errors and dispute any inaccuracies you find. Fixing inaccuracies in your credit report involves several steps:
- Obtain Your Credit Report: You are entitled to a free credit report every year from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Review these reports carefully for any discrepancies.
- Identify and Document Errors: Make a list of any errors you find. Gather documentation about the error.
- Dispute the Errors: You can dispute errors online, by mail, or over the phone with the credit bureau that has the inaccurate information. Clearly explain each error and include copies (not originals) of your supporting documents, like payment records or court documents. All three credit bureaus, Equifax, Experian, and TransUnion, have an online dispute process, which is often the fastest way to fix a problem.
- Follow Up: Credit bureaus typically investigate disputes within 30 days. Follow up to ensure that the errors have been corrected.
If you see mistakes in your report, contact the credit bureau and the company that provided the information. Ask both to correct their records. Include as much detail as possible, plus copies of supporting documents, like payment records or court documents.
If you’re considering paying a credit repair organization to help fix your credit, keep in mind that anything they can do for you legally, you can do for yourself at little or no cost. Credit repair organizations can NOT legally remove accurate negative information from your credit report. If you hire a credit repair organization, don’t do business with one that insists you pay before it helps you (that’s illegal), tells you not to contact the credit bureaus directly, or disputes information in your credit report you believe is accurate.
How to Monitor Credit Report
Monitoring your credit reports is an important part of maintaining your financial health. Here are some ways you can do it:
- Annual Credit Reports: You are entitled to a free credit report every year from each of the three major credit bureaus: Equifax, Experian, and TransUnion. You can request these free annual credit reports online, by phone, or by mail.
- Credit Monitoring Services: There are several credit monitoring services available that can help you keep track of your credit reports. These services notify you of changes in your credit report and check your financial accounts and the dark web for possible fraud or theft. Some of these services are free, while others require a subscription.
- Credit Card Issuer Services: Some credit card issuers offer free credit monitoring services to their cardholders. These services can alert you to changes in your credit report.
Regular monitoring of your credit reports can help you spot errors, inconsistencies, or signs of identity theft early, so you can take steps to address them.
