Your credit report is a summary of your credit history — it shows how responsibly you’ve used credit in the past. It’s important to understand what’s on your credit report and what it means. Learning how to read a credit report is essential, as this information may affect your ability to do everything from borrowing money to renting an apartment. However, there’s no denying that credit reports can be complex and difficult to understand.
Are you ready to learn the ins and outs of your credit report? In this detailed guide, we’ll break down how to get a copy of your credit report, how to understand the key sections, and what to do with that information.
Obtaining Your Credit Report
There are plenty of financial apps and websites that provide you with the contents of your credit report. However, the best way to get your report is to visit AnnualCreditReport.com. It’s the only website authorized by the federal government to issue credit reports from each of the three credit report agencies: Equifax, Experian, and TransUnion.
To get your free credit reports, you’ll fill out a short form to verify your identity. Then, you’ll indicate which credit reports you’d like copies of and can see each one. You can either view each report on the website or can download or print it.
Historically, federal law has allowed each person to get a free copy of each credit report once per year. However, at the start of the COVID-19 pandemic, all three credit reporting agencies started offering free weekly credit reports, and they’ve permanently extended that program.
Though you can get a free credit report each week, it’s not usually necessary. It’s a good idea to check your credit reports at least once per year and before applying for any new loans. You can also set up credit monitoring, either directly with the credit bureaus or through a third-party site, so you’re alerted if anything new is added to your report.
Understanding Key Sections of a Credit Report
Though the appearance of your credit reports may vary slightly from one credit reporting agency to the next, they all include the same key information. Let’s walk through the sections of a credit report so you know how to understand them.
Personal Information
Each credit includes a summary of your personal information, including:
- Current and previous names
- Social Security number
- Date of birth
- Current and previous addresses
- Current and previous phone numbers
- Employment history
When you’re viewing your credit report, make sure all of the personal information listed is correct. While it may not seem like important information, it’s one of the most common places on your credit report to find errors.
Account Information
The largest section of your credit history is a summary of your accounts. This section includes a list of all of your accounts, possibly broken down by type. For example, it may have one section for revolving credit, such as credit cards or lines of credit, one section for installment loans, such as auto loans, personal loans, or student loans, and one section for mortgages. It may also separate your accounts by those current on payments versus those that are past due.
For each account, you may find some of the following information:
- Account name
- Account number
- Account type
- Responsibility (individual vs. joint account)
- Date opened
- Account status
- Current account balance
- Credit limit
- Highest account balance
- Date updated
You’ll likely also see a payment history, which shows a list of monthlies over the past several years and whether you met your payment obligations. This section will include both open and closed accounts, and closed accounts may remain for up to 10 years.
Your payment history is the most important factor when it comes to your credit score. It’s important to pay special attention to this section, both to make sure everything is accurate and to determine if any accounts need your attention or a debt relief attorney.
Public Records
Your credit report will include a section for public records, which includes bankruptcies, and foreclosures. Many people won’t have anything listed in this section. But if you do have public records, such as bankruptcy or foreclosure, they can significantly impact your credit score.
The amount of time these public records will stay on your credit report depends on the type of record. For example, foreclosures stay on your credit report for seven years, while bankruptcies often stay on for 10 years.
Credit Inquiries
Your credit report will list all hard and soft credit inquiries within the past two years. Soft inquiries are those that occur when you check your own credit or when a third party runs an inquiry for a promotional offer. For example, if you’ve gotten a credit card preapproval in the mail, the company likely did a soft inquiry ahead of time.
In some cases, you may see lots of soft inquiries on your credit report. For example, if you use credit monitoring software, they may do a soft inquiry as often as weekly (or more). Don’t worry, though — these inquiries don’t affect your credit score.
Hard inquiries, on the other hand, are done when you apply for credit. These inquiries allow lenders to do a deeper dive into your credit report and may negatively affect your credit score (though often only temporarily).
Interpreting the Data
While some parts of your credit report may be self-explanatory, others can be a bit more confusing, especially since each credit reporting agency uses its own codes and terminology.
As you’re interpreting your credit reports, refer to each credit reporting agency’s user guide, which includes a glossary of all the codes used. Here’s where you can find those guides:
How to Identify Red Flags
As you’re reading your credit report, it’s important to look out for two types of red flags. First, look for incorrect information. We’ll discuss what to do if you find any in the next section.
The other type of red flag to look out for is damaging information, meaning anything that could reflect poorly on you as a borrower or damage your credit score. This information could include late payments, delinquent accounts, accounts in collections, and more.
If you find damaging information on your credit report, it’s important to resolve it as quickly as possible to prevent it from further hurting your credit score.
Disputing Errors on Your Credit Report
A 2024 study by Consumer Reports and WorkMoney found that about 44% of consumers found errors on their credit reports. 34% found errors related to their personal information, while 27% found errors related to their account information.
Unfortunately, credit report errors can hurt your credit score and have other negative consequences. The good news is that if you find them, you can dispute them and have them removed from your report.
Common Errors to Look For
The most common errors on credit reports are related to either personal information or specific accounts. Inaccurate personal information could include a wrong name, phone number, address, or employer.
In some cases, you may find that your account has been mixed up with someone else who has the same name. That could create a situation where some of that person’s accounts appear on your credit report and vice versa.
You may also find inaccuracies directly related to your debt. For example, accounts may have incorrect account statuses, payment histories, balances, credit limits, and more. While it may be tedious, it’s worth checking each piece of information for each account on your credit report to look for errors.
How to File a Dispute
If you find an error on your credit report, you should dispute it with each credit reporting agency that’s reported the error. You can do this in a few different ways. First, you can dispute the error in writing by sending a letter to the reporting agency. Next, you can dispute the error over the phone. Finally, each credit reporting agency has a form on its website where you can submit disputes.
While you can use any of these methods to dispute errors, it may be better to use a method you can easily keep a record of, such as sending a letter or completing an online form.
If you suspect an error on your credit report was the result of identity theft, it’s also important to report that separately. You can report identity theft to the Federal Trade Commission at IdentityTheft.gov. You should also report it to your local police department.
What to Expect During the Dispute Process
Once you dispute an error with a credit reporting agency, the agency has between 30 and 45 days (depending on the situation) to investigate it. In their investigation, the agency will likely contact the company that reported the information to ask them to verify it.
Once the agency has completed its investigation, it must share the results with you within five days. It will either remove the error from your credit report and provide you with an updated copy of it or inform you that the information is correct and will remain on your credit report.
If the error is related to one of your debt accounts, you can also contact the lender directly while you wait for the credit reporting agency to complete its investigation. You can inform the lender of the error and ask them to fix it themselves.
Tips for Improving Your Credit Report
The information on your credit report is used to calculate your credit score. Lenders use both of these to assess your eligibility as a borrower and to set your interest rates. Additionally, landlords and insurance companies may use this information when you’re applying to rent an apartment or signing up for car insurance.
Having a healthy credit report and credit score can make it easier and cheaper for you to borrow money. Here are a few ways to improve your credit based on the most important factors that make up your credit score.
Paying Bills on Time
Your payment history makes up the largest section of your credit report and is the most important factor in your credit score. You can improve your credit simply by paying all of your bills on time each month. And if you have past-due accounts, you can improve your credit by catching up on your payments or seeking out a debt help attorney to assist you with resolving your debt.
Keeping Credit Card Balances Low
Your credit report shows the percentage of your available credit you’re using. This number, known as your credit utilization, is another important factor in your credit score. Ideally, you should maintain a credit utilization of no more than 30% for the best credit score. If you have credit cards with more than 30% utilization, focus on paying those down.
Keeping Old Credit Accounts Open
You’ll notice that your credit report shows the age of each of your credit accounts. It may also show the total length of your credit history and the average account age.
A long credit history isn’t necessarily required for a good credit score, but it can help improve your credit. If you have an old credit card that you don’t use, consider keeping it active just so you can maintain your credit length.
Maintaining a Healthy Credit Mix
Another factor that’s included in the credit score calculation is your credit mix, meaning the variety of credit on your credit report. While this factor isn’t too important, it can have a small impact on your credit score.
A healthy credit mix will include diversity, meaning several types of credit. For example, it might look like having credit cards, an installment loan, and a mortgage rather than just one type of credit.
Avoiding Opening Too Many New Accounts
When you apply for new credit, it will appear on your credit report as a hard inquiry and may temporarily lower your credit report. Though applying for credit isn’t a bad thing when you need it, avoid regularly applying for new credit you don’t need.
Regularly Reviewing Your Credit Report
One of the best ways to maintain a healthy credit history is to regularly check your credit report. First, checking your credit report can help you identify any errors and have them removed as quickly as possible. Additionally, checking your credit report can help you identify negative information, such as past-due accounts, which may be hurting your credit score. Once you know about the information, you can take steps to fix it.
Conclusion
Your credit report is among the most important aspects of your personal finances, but it’s one that many people find confusing or inaccessible. In fact, 11% of consumers in the Consumer Affairs study found it either somewhat hard or extremely hard to access their credit reports. And it’s often even more confusing to understand the information once you’ve accessed it.
Hopefully, this guide will help you navigate your credit report so you can start taking steps to improve your finances. And if you’re struggling with any aspect of your credit report, such as accounts in collections or overwhelming debt that is challenging your budget, we may be able to help. Call us today for a free phone consultation at (866) 890-7337 or fill out our short contact form. We never share or sell any of your information.
