Your credit report is an important part of your financial well-being, so take the time to learn what it is and how to check it.
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?
Keep reading to find out all you need to know, now.
What is a credit report?
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 and public records such as bankruptcies.
Where do you get a credit report?
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. And the credit bureaus are continuing to offer one free credit report per week during the coronavirus pandemic.
What’s in a credit report?
This is the information you can expect to see on your 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, such as bankruptcies (but not tax liens)
- A list of companies that have reviewed your credit
Why should you check your credit report 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 (670 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 rewards and perks.
Your credit report can also be used by employers and landlords 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 faster you can get it removed and recover from any damage. If you’re concerned about this possibility, you can also choose to freeze your credit, which prevents you (and anyone else) from taking out new credit until you lift the freeze.
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 that of someone else with 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.