What is a credit report?
Personal finance journalist with an eye for industry news
You’ve heard time and again that you must regularly check your credit report. You know it’s important, but what is it, and where and how does the “checking” happen?
A credit report is a record of your current and past credit accounts – credit cards and loans – and it includes information such as your payment history, credit limits, highest card balances and debt-to-limit ratios. It also includes any recent credit inquiries, collection items, public records such as bankruptcies and, in some cases, tax liens and civil judgments.
Credit reports are compiled by the three major credit bureaus – Equifax, Experian and TransUnion – with information provided to them by banks, card issuers, lenders, collection agencies and other data furnishers. You are entitled by law to obtain one free copy of your credit report per year from each of the bureaus at AnnualCreditReport.com. (You can also get a free copy of your TransUnion credit report at CreditCards.com.)
What's in a credit report?
- Your name.
- Your Social Security number.
- Your current and previous addresses.
- Information about your current and past loans and credit card accounts.
- Collection items.
- Outstanding medical debts that are more than 180 days old and are not being paid by insurance.
- Your public record information (bankruptcies and some civil judgments and liens).
- A list of companies that have reviewed your credit.
So, why should you check it often? Your credit report forms the basis for your credit score – a numerical grade that typically ranges from 300 (poor) to 850 (excellent). Lenders rely on credit reports and scores to evaluate borrowers and decide whether or not to offer them credit and what the terms will be if they do. A clean credit report and a good credit score (700 or higher) can help you secure favorable interest rates on home and auto loans and qualify for credit cards with the lowest APRs and best perks. Your credit report can also be used by employers and renters to determine if they will hire you or grant you a lease.
Additionally, monitoring your credit is a critical safeguard against fraud. If an identity thief opens a credit account using your personal information, it will appear on your credit report. The sooner you identify a fraudulent account, the more quickly you can get it removed and recover from any damage.
It’s also important to keep an eye out for any credit report errors – a common occurrence given the massive volume of data that flows between data furnishers and credit bureaus. Credit report errors can make you look less creditworthy than you really are, particularly if your file is mixed up with someone who has bad credit.
To keep your credit in the best possible shape, pull a credit report from one of the three credit bureaus for free once every four months and review it carefully to make sure all the information is accurate and up-to-date. Additionally, take steps to improve any negative items that could be weighing down your credit score.
- Child identity theft: Costly, time-consuming and more common – Young adults often struggle to obtain credit due to a lack of borrowing history, but many are also hindered by identity theft that happened when they were kids. ...
- I finally froze my credit, and it was less hassle than I thought – If you feel daunted by financial tasks, you may put off freezing your credit, even though it's now free. But a credit freeze is faster and easier than you may think ...
- FICO: Average credit score reaches all-time high of 704 – The average FICO score among U.S. consumers has reached an all-time high of 704, according to a new FICO report ...