Take control of your credit by learning how to read and act on this powerful financial tool.
By E. Napoletano | Edited by Colin Hogan | Reviewed by Ray Frager | April 19, 2024, at 12:05 p.m.
Be sure to review your credit report for accuracy in order to resolve discrepancies.
Key Takeaways
- Your credit report is a combined history of your credit, including accounts, balances, payment history and monthly payments.
- Understanding how to read your credit report can help you spot inaccuracies, protect your identity and potentially improve your credit score.
- You can dispute inaccurate information on your credit report with the appropriate credit bureau.
Building credit is a lifelong journey. One of the most important steps you can take along the way is learning how to read a credit report. This knowledge can unlock various opportunities and resources that help you achieve your most important financial goals.
"By understanding the information in your credit report, you can understand your overall creditworthiness and financial standing," says Rod Griffin, senior director of consumer education and advocacy at Experian. "From there, you can take steps to address issues and ultimately improve your credit standing. This can open doors to better interest rates, access to credit and financial opportunities."
How to Get Your Credit Report
You can easily get a free copy of your credit reports by visiting AnnualCreditReport.com. Here you can request copies of your credit reports from each of the three major credit bureaus: Equifax, Experian and TransUnion. How often you choose to check your credit report is up to you, but here's good news: You can get a free copy of your reports through this site as frequently as once per week.
You may also have access to your credit report through credit monitoring tools offered by one of your credit cards or various personal finance websites. These tools, however, typically only offer access to a single bureau's credit report rather than all three.
No matter how you receive a copy of your credit report, what's important to remember: You should never have to pay to get a copy of your credit report. Save that cash and put it toward an extra debt payment or your emergency fund.
How to Read Your Credit Report
Once you've received a copy of your credit report, it's time to learn how to read it. Fortunately, says Griffin, there's not much of a learning curve. "If you can read a book, posts on a social media platform or a blog post, you can read your credit report," he says.
Credit reports from all three bureaus are broken down into six main sections that make navigation simple: personal information, public records, account information, collections, inquiries and consumer statements.
Personal Information
The personal information section includes key identifying information that creditors need to see when you apply for credit. This includes:
- Your name (current, previous and any misspelled variations).
- Address (current and past).
- Social Security number.
- Date of birth.
- Phone number(s).
- Employers (current and past).
Information in this section is especially important to track, as names, spellings and addresses you don't recognize could be signs of identity theft – especially if you later see accounts you don't recognize.
Public Records
Bankruptcy filings appear in this section of your credit report and can have a significant impact on your ability to obtain new credit. Chapter 7 bankruptcies stay on your credit report for 10 years following the discharge date and Chapter 13 bankruptcies appear for seven years.
Account Information
The accounts section of your credit report is your credit history and includes a month-by-month chronicle of how you've handled past and current debt obligations. You'll see an individual entry for both open and closed credit accounts, along with important information regarding the credit limit, current balance, monthly payment and payment history – including whether the account is in good standing or you're behind on payments.
Each account entry also includes the creditor's contact information.
Adverse Information and Collections
If you've fallen behind on payments to the point where the creditor has sent your account to collections (either internally or to an external debt collector), those accounts would be listed here. All accounts in this section include at least the debt collector's name and contact information but may also note the original creditor.
While it's important to pay all outstanding debt obligations, it's also helpful to know that all collections will fall off your credit report seven years from the date of the original missed payment.
Inquiries
When you or another party obtains a copy of your credit report, those requests, or inquiries, are listed in this section. Reviewing this section lets you know who's requested your credit and the potential impacts those requests may have on your credit score.
- Hard inquiries. These occur when you apply for a new line of credit, like a credit card, mortgage or car loan. Hard credit inquiries can have an impact on your credit score, especially if there are several in a short period.
- Soft inquiries. These don't impact your score and can only be seen by you and the credit bureau. These can occur when you request your credit report or seek preapproval for a loan or credit card.
To further protect your credit from inquiries you don't initiate, you could consider placing a freeze or a lock on your report with all three credit bureaus.
Consumer statements
A consumer statement is a comment that you attach to your credit report to add further context to reported information. According to TransUnion, these statements can be used to explain your financial situation. While there's no guarantee that a creditor will take a personal statement into account when deciding whether or not to grant you credit, having one could give more context to a period of late payments or other adverse information.
This section will be blank if you haven't filed a personal statement.
What to Look for When Reading Your Credit Report
Now that you know how to read your credit report, it helps to know what to look for each time you access your files. Eric Kirste, a certified financial planner and wealth manager at Savvy Advisors, says there's one main thing to keep an eye out for in every section of your report: accuracy.
"Reviewing your credit report to identify and resolve discrepancies will potentially help build your credit score," says Kirste.
Here are individual things to keep an eye on in different sections of your credit report.
- Personal information: Misspellings of your name, names and addresses you don't recognize, birthdate and Social Security number errors, incorrect employers.
- Public records: Bankruptcies that don't belong to you or that are still on your credit past the applicable seven- or 10-year window.
- Account information: Accounts and joint account holders you don't recognize, inaccurate payment histories, inaccurate credit limits.
- Collections: Accounts you don't recognize, inaccurate balances.
- Inquiries: Inquiries you don't recognize or feel you didn't authorize.
Kirste says another key thing you'll want to look for is that your accounts are showing "green" – that is, an on-time payment history. Credit bureaus may color-code payment histories, using green for on-time, yellow to orange for 30 to 60 days late and red for 90 to 120 days or more late.
One thing to keep in mind with payment histories is that credit reports don't show payments in real time. Instead, there may be a lag between payments you make and the record shown on your credit report. This is perfectly normal.
How to Dispute Credit Report Errors
The easiest way to dispute errors on your credit report is through the individual credit bureau's website. Filing a dispute is always free and a right of all consumers, thanks to the Fair Credit Reporting Act.
To file your dispute, Kirste says you'll need to "clearly identify each mistake, state the facts, explain why you're disputing the information and request that it be removed or updated." He adds that the online dispute forms from all three credit bureaus make the dispute process easier, guiding you through the process step-by-step.
If you obtain your credit reports through AnnualCreditReport.com, the site will provide a link to start a dispute with a credit bureau. However, you can also initiate a dispute via phone or mail.
- Equifax: Dispute online, via phone at (866) 349-5191 or via mail at Equifax Information Services, LLC, P.O. Box 740256, Atlanta, GA 30374-0256.
- Experian: Dispute online, via phone at (866) 200-6020 or via mail using their dispute form at Experian, P.O. Box 4500, Allen, TX 75013.
- TransUnion: Dispute online, via phone at (800) 916-8800 or via mail at TransUnion Consumer Solutions, P.O. Box 2000, Chester, PA 19016-2000.
When you file a dispute, the credit bureaus and creditors should respond within 30 to 45 days. Then, they'll notify you of the results and actions taken within five days. You'll also receive an updated copy of your credit report showing the changes.
And even if you never have to dispute anything on your credit report, getting into a solid review habit can empower you to make financial decisions with confidence.
"Whether applying for a loan, renting an apartment or negotiating terms with creditors, having a clear understanding of your credit report can equip you with the knowledge needed to advocate for yourself and secure favorable outcomes," says Griffin.
Tags: credit scores, credit reports, Equifax, TransUnion, Experian
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