Your credit report: What you need to know
Your credit report offers a snapshot of your financial life and may be accessed by anyone from potential employers to lenders. Plus, the information it contains determines your credit score. By understanding how to read your credit report, what comprises it and how to monitor it, you'll be better equipped to handle your finances overall.
How to read your credit report
The three major credit bureaus—Experian, Equifax and TransUnion—collect information from public records and companies you do business with. They use that information to create your report. That report has four sections:
- Personal information: This section includes your name, address (as well as previous addresses), Social Security number and date of birth.
- Credit history: This includes all of your open and closed credit accounts and your track record for repaying them.
- Public records: This lists any public records related to your finances, such as property liens or bankruptcies. It's just financial records, though, so any nonfinancial public records you may have, like speeding tickets, won't be on here.
- Credit inquiries: This section shows everyone who's checked your credit in the past 2 years—landlords, employers, lenders and more.
What to look for in your report
You'll probably want to focus most of your attention on section two, which reviews your payment history. This section will list all of your credit accounts-both current and past, from credit cards to medical bills-and your record of paying them back.
There can occasionally be errors in this section. Perhaps your doctor's office mistakenly reported that you neglected to pay your deductible, for example. If errors like this occur, it's a good idea to reach out first to the creditor and then to the credit agencies themselves. If companies are unresponsive, you can use the Consumer Financial Protection Bureau layer as a resource for reporting problems.
If the error you find looks to be fraudulent—for example, you see a mortgage for a house you don't own—there are two steps to take. You'll want to call the credit bureaus and ask them to put a fraud alert on your account; this will require them to take steps to verify information surrounding the suspicious activity. You'll also want to file a report with either the police or the Federal Trade Commission layer (FTC). For more details of what steps to take if you suspect you're a victim of identity theft, check out our video.
“Your credit report must be given to you free of charge once a year by each of the major credit bureaus if you ask for it.”
How it relates to your score
Your credit score is a grade assigned to your credit history—the information in your report. The most commonly used credit scores are provided by Fair Isaac Corporation and are known as FICO® scores. They range from 300 (the worst) to 850 (the best). Creditors differ, but a good score is usually considered to be 700 or above. For more information on FICO® and what goes into your credit score , plus how your actions affect it, check out our explainer.
How your credit report affects your finances
Ultimately, lenders can look at both your credit report and credit score when deciding whether to lend you money, so paying attention to both is important.
Remember, having good credit can set you up for a number of other financial successes. For example, you may be more likely to receive a loan, or you may qualify for a lower interest rate, which can save you money in the long run. A high credit score can also make it easier to get rewards credit cards, which offer perks, like travel deals or cash back.
How to get a copy
Some banks and credit card companies provide you with a copy of your credit score as part of your monthly statement, but if you ask the credit agencies for it, you may be charged a fee. However, your credit report must be given to you free of charge once a year by each of the major credit bureaus if you ask for it. (You're also entitled to a free copy of your report if you ever apply for a credit card and are declined.)
This is one of the reasons knowing how to read a credit report is so important—you have three free opportunities a year to make sure the information kept on you and your credit is accurate. To obtain a copy of your report, visit annualcreditreport.com layer or call 877.322.8228.
If you're just starting to build your credit, or if you're trying to rebuild it after a setback, there are a number of options to help you out. Now that you know how to read, and use, your credit report, you're better prepared to manage your credit.
FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.