Important Update: Bureaus Offer Free Weekly Reports Through April 2022
In light of the unprecedented financial crisis caused by the COVID-19 pandemic, the credit bureaus have expanded free credit report access. You can now download your credit report from each bureau once per week through annualcreditreport.com.
We recommend taking advantage of these free weekly reports to check your credit often during this crisis, so you can avoid mistakes.
In short, a clean credit report helps you realize your financial goals. By contrast, a bad credit report can prevent you from doing all of that, as well as prevent you from renting property or car, and even getting that job you wanted. This makes it essential to understand how credit reports work and how to use them to your advantage.
Table of Contents
By law, everyone is entitled to receive one free credit report from all 3 credit bureaus every 12 months.
What is a credit report?
At a basic level, a credit report is a document that summarizes your history as a credit user. This includes your credit and payment history, an overview of accounts, and any public records history that might relate to your financial makeup, such as finance-related court judgments like alimony or child support.
Information from your credit report is used to calculate your credit scores so lenders and creditors can have an easy way to assess your “creditworthiness” and risk as a borrower. This makes credit reports key to maintaining a healthy financial outlook.
3 credit reports for you to review
Although you always hear the saying to check your credit report regularly, in truth you don’t just have one report.
Each of the three main credit bureaus (Equifax, Experian and TransUnion) maintains their own version of your credit history. Creditors and lenders may pull one or all three reports when they run a credit check. You rarely know which report a lender will check. So, you have to know what’s in all three reports.
By law, you have access to a free copy of your credit report every twelve months. You can access it at annualcreditreport.com. Once you have all three reports you should go through and confirm everything. If you find any mistakes you can start the credit repair process by reporting errors to each of the bureaus or credit furnishers.
Working to improve your credit? This tool can help you identify potential errors and make disputes. Try it free for 14 days.
How to read a credit report
Although each bureau’s report differs slightly from the others, they all contain the same basic information. Thankfully, all of the reports also generally present the same information in a way that makes reading and understanding your credit reports a little easier. Experian even published a sample report that guides you through what you will be seeing.
Here’s what each report will contain:
This section gives your personal details: name, current address, previous addresses, social security number, date of birth, and employer. It may also list any aliases assigned to you; for example, if your name is John Smith, your report may list aliases for John C. Smith if you used your middle initial to open an account.
Although each report differs slightly in how the information is presented, all credit reports contain a summary of your different types of credit accounts and loans. This information includes the type of account (e.g. auto loans, student loans, mortgages), current balance, open/close dates, and account status. This section will be affected by whether you pay your bills on time.
All credit reports include public records information that may be relevant to your credit profile. Court judgments such as bankruptcy and foreclosure are included here. It may also include collections accounts.
Credit reports have a section for credit inquiries to show when a hard credit inquiry was made on your report. A hard inquiry is where a creditor requests your report when you apply for a new line of credit. This is a factor in determining your credit score.
Your credit report will also always contain a section for consumer statements (sometimes called personal statements). You can add a consumer statement if you have recently been the victim of identity theft and wish to prevent anyone from opening lines of credit in your name without your express consent. It also includes any statements you make regarding rejected reports of discrepancies.
Negative information doesn’t stick around forever
While your credit report summarizes your credit history, it doesn’t cover everything indefinitely. Even positive information, such as accounts paid off and closed in good standing will only remain on your report for 10 years.
Negative information only remains on your report for a limited time. Most negative information sticks around for seven years, although some items may stick around longer.
What to do with your credit report
Checking your credit reports regularly is essential to maintaining a good credit rating. You may think you can trust the credit bureaus to maintain a correct report for you, but the reality is mistakes are more common than you think.
Multiple studies show roughly 3 in 4 credit reports contain errors of some kind.
Experts recommend you should check your credit report at least once each year. They also recommend you should check it before you apply for a new line of credit or attempt to purchase a major asset, such as a car or home. You should take steps to get your credit report corrected if you find errors. This could involve contacting your data furnishers or filing a dispute directly with the credit bureaus.
Make getting your credit reports easier
Monitoring your credit is a must if you want to watch out for identity theft and improve your credit score. If you want to make reading your credit reports even easier, using a software like the premium version of SmartCredit may work for you.
SmartCredit offers tools for tracking, building, and mastering your credit. With the premium version, you can get credit reports from all three credit bureaus multiple times per year. Because SmartCredit was made to guide you through learning about and fixing your credit, you can get the information you need without struggling to read your different credit reports.
Connect with a professional credit repair company now to correct errors in your credit report that may be negatively impacting your score.
Article last modified on July 15, 2021. Published by Debt.com, LLC