A Basic Guide to Understanding Your Credit Report
Your credit report is one of the most important documents of your life. Banks, lenders, and other businesses use your credit report to make financial decisions about whether to do business with you and how much they will charge.
A good credit report – one with positive information about your borrowing habits – leads to a higher credit score that will get you lower rates and better repayment terms.
A bad credit report includes negative information and means a lower credit score, resulting in more higher interest rates and less favorable credit card and loan terms.
It's in your best interests to order your credit report, read through it, understand it, and make any changes to erroneous information.
Getting Access to Your Credit Report
You can order your credit report directly from the major credit bureaus - Experian, Equifax, and Transunion – by going to each of their websites. You’re also legally entitled to a free copy of your credit from each of the credit bureaus once a year.
You can get hold of your free annual credit report by going to AnnualCreditReport.com. Although your credit reports may vary slightly between bureaus, much of the information they contain will be the same.
What Information that Appears in Your Credit Report
The personal information is information about who you are, where you’ve lived and worked. It includes your:
- Name, including aliases or misspellings.
- Date of birth and social security number.
- Current home address and previous home addresses.
- Phone numbers.
- Current employer and past employers.
The next part of your report is a list of all the credit accounts you have held. This can include:
- Revolving credit accounts such as credit and charge cards.
- Fixed credit accounts like car and other loans.
- House loans like mortgages and remortgages.
- Other loans like student debt.
Each account includes various details:
- Creditor names -- the names of the businesses that provided the line of credit or loan to you.
- Account numbers and dates including when the account was opened and closed.
- The current credit balance on the account (how much you owe).
- The status of the account including whether it is still active, how many payments you have made and missed, and if the account is in arrears or default because you have missed payments.
Your credit report will include information that’s on public record with state and Federal courts. This will include court judgments against you, whether you have declared bankruptcy, and if you have a lien, foreclosure or repossession.
Each time a company checks your credit to approve or pre-approve you, an inquiry is added to your credit report. These inquiries are listed in a separate section on your credit report.
Correcting Your Credit Report
When you receive your report, read through it carefully to make sure all the information is accurate. If you find errors, contact the relevant credit bureau to dispute the information.
It is important that you do this quickly to reduce the impact of incorrect information on your credit report and score.