Understanding Your Credit Report

November 28th, 2019

By now, you’ve probably heard it’s in your best interest to check your credit report a couple of times per year for accuracy and errors. But do you know what to actually look for once you’ve got your credit report in front of you?

Getting Your Report

To be able to review your credit report, you first need to get a copy of it. You’re allowed one free credit report per year from one of the major reporting agencies (TransUnion, Equifax and Experian) at annualcreditreport.com. Experts recommend alternating which agency you get your report from every year, you may find something different on each report.

You may want to think about getting all three reports now if you are thinking about buying something big soon such as a new car or home. This gives you the chance to correct any mistakes on all of them right away. If there are no big purchases in your immediate future, requesting them over time might be a better choice. When you spread them out, watch for expected changes or suspicious activity throughout the year.

Reading Your Report

Once you get your credit report, you’ll see it’s separated into six sections. Here’s an overview of what those sections are and what to check:

  1. Personal Information
    This section includes your name (and any names you’ve used), current and previous addresses, phone numbers, social security number and birthdate.
    You may find a few various spellings of your name or your maiden/married name. Make sure none stand out. Also, check the listed addresses to verify they’re all places you’ve lived. Unfamiliar addresses might mean someone has opened a fraudulent account in your name.
  2. Accounts
    You’ll find all of your accounts, current and closed, in this section. You’ll also find your payment history for each account, listing any late payments. Review your accounts to see if there are any you don’t recognize, if there are any listed as open that are closed, or vice versa.
  3. Inquiries
    Any time you apply for a loan or credit card, you’ll get what’s called a hard credit inquiry on your report. A hard inquiry will ding your credit score a bit. The good news is if you’re shopping for a loan or credit card at several places at the same time, the credit reporting agency will usually list them as one hard inquiry.
    You’ll also see soft credit inquiries listed. These are when someone, often a new employer, does a background check on you. Or sometimes a credit card company will do a soft inquiry before making you an unsolicited offer.
  4. Public Records
    This area will show records obtained from local, state and federal courts. Listings include bankruptcies (which stay on your report for up to 10 years), judgements (up to seven years) and liens (up to 10 years).
  5. Collections
    Here you’ll find any outstanding debt placed by creditors through collection agencies. These will usually have a negative impact on your credit score.
  6. Consumer Statement
    If there are mistakes on your report or mitigating circumstances that have affected your information, this is where any brief statements you’ve submitted to the bureau will appear.

In conclusion, be sure to keep an eye on your credit report whether it’s yearly or bi-annually. You don’t want any last-minute surprises when you’re looking to make an important purchase.

Want to understand all of the factors that negatively impact your credit score? We’ve got a blog for that!

 

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