A credit report summarizes your financial history and includes information about how you use credit. Lenders use credit reports to decide whether to grant you credit, and what terms. Other businesses, including landlords, cable and utility companies, also review credit reports. Government agencies may check reports for eligibility for benefits, and to see if you owe child support or other debts.
What is a credit report?
A credit report is a collection of facts about an individual, compiled by consumer reporting agencies like Experian, Equifax and TransUnion. These bureaus receive financial data from lenders and other sources that extend credit to tens of millions of people.
Each credit report contains personal identifying information, including the name of the person, birth date, social security number and current and previous addresses. It also lists the names of co-applicants, spouses and other persons associated with the consumer. Public records, such as bankruptcies, tax liens and monetary judgments are listed too.
The accounts section includes details about the consumer’s financial history, such as open and closed accounts, credit limits and balances, payment and collection histories and more. Lenders use this data when evaluating applications for credit cards, loans and mortgages. In addition, prospective employers, landlords and insurance companies may request access to a consumer’s credit reports. These reports can be used to evaluate the applicant’s reliability and trustworthiness.
What is a credit score?
A credit score is a number that lenders use to determine your risk when you apply for credit. It is based on the information in your credit report, and it usually accounts for your payment history, amounts owed and types of credit you have. Credit bureaus (Experian, TransUnion and Equifax) have different formulas that they use to calculate your credit score.
A credit report typically includes the following items:
Accounts: This section of the report lists detailed information about your existing credit accounts, including credit card accounts, retail credit, installment loans, finance company accounts and mortgages. It also includes the status of each account (opened or closed), the credit limit and the highest balance reported during the account’s life.
The accounts section also lists your payment history, which accounts for 35% of your credit score. It looks at your pattern of paying bills on time and notes any late payments, which can stay on a credit report for seven years.
How do I get a copy of my credit report?
Credit reporting agencies sell information about you to businesses that use it to decide whether to loan you money, provide insurance or rent or buy a home. You are entitled to one free report from each nationwide credit bureau each year. You can request them all at the same time, or you can stagger your requests throughout the year.
Your report contains details about your financial accounts and how you pay them. It also includes personal information like your name, address and Social Security number. Credit reports are used to create your credit score, which is a three-digit number lenders use to gauge your creditworthiness.
You should check your credit report often, especially before applying for a new mortgage, credit card or loan. It’s also a good idea to check your report if you receive notice that you were denied credit, insurance or a job, or you believe your file is inaccurate due to fraud.
How do I check my credit score?
There are many ways to check your credit score, but the best way is through a credit card issuer. Most credit card companies offer their customers FICO and VantageScore scores through a website that can be accessed for free or for a monthly fee.
When evaluating a free or paid score service, find out what credit bureau and scoring model it uses and how often the score is updated. Also, consider whether it offers other features such as monitoring and alerts.
It’s a good idea to know what your credit scores are before applying for new credit cards, personal loans or mortgages because lenders use different versions of your credit reports to calculate their scores. If you have a FICO or VantageScore from one of the three credit reporting agencies but your lender is using a score from another, it may not be an exact match. This can affect your chances of being approved and could impact the interest rate you pay.