Credit reports are a detailed account of your financial history. Lenders, insurance companies and employers often use them to make decisions about you.
Your credit report includes information about your accounts, credit inquiries and public records. You may also see information about bankruptcies, liens and civil judgments.
What is a credit report?
A credit report is a record of your credit history that lenders (banks, mortgage companies and others) use to decide whether to give you credit, and how much to charge you.
It shows your past and current credit accounts, bill payment history, debt, employment, and public records like bankruptcies, judgments and tax liens.
Lenders and other creditors report the information on your credit, loans and payments to the three main consumer credit reporting companies: Equifax, Experian and TransUnion.
The information on your credit reports can help you get a job, a mortgage or auto loan, or even a rental property. It can also affect your interest rates, terms and cost of insurance.
What is a credit score?
A credit score is a three-digit number that helps lenders evaluate your risk level as a borrower. It can also help determine whether you’ll be approved for a mortgage, auto loan, personal loan or credit card.
A higher credit score usually means a better chance of getting approved for the type of credit you’re applying for and better rates and terms on that credit. Your credit score is based on information from your credit report and can change as new information gets added or removed.
The most important factor in calculating your credit score is your payment history. This includes your payment history on any open credit accounts in your name and data on missed or late payments, bankruptcy filings and debt collection. It also includes your mix of credit, which is the combination of revolving credit accounts, retail accounts and installment loans in your credit file.
How do I get a copy of my credit report?
Your credit report is an essential tool for establishing credit and managing your finances. It includes information on your loan and credit card accounts, outstanding debts, collection actions, and more.
The credit bureaus (Equifax, TransUnion and Experian) make it easy to order your credit reports for free. The process involves filling out a form to receive your reports by mail or, in the case of Equifax, by phone. You can also sign up for a credit monitoring service that will send you monthly alerts when changes are made to your credit file.
The credit bureaus also offer a multi-question quiz that lets you compare your credit score with those of other consumers. It can be a fun way to learn more about your credit history. The craze has even spread to the workplace, as more employers are using credit reports to evaluate job candidates. You can find more info about credit reporting at the Federal Trade Commission website.
How do I dispute errors on my credit report?
Errors on your credit report can make it difficult to get credit, including a credit card, mortgage or auto loan. These errors can include payments mistakenly labeled as late or accounts listed twice.
Credit bureaus and the businesses that supply information to them have a legal obligation to correct inaccurate or incomplete information on your credit report. They must do it for free.
The first step is to dispute the inaccurate information with the credit bureau that supplied it. This can be done online or by mail.
In your dispute letter, explain what you think is wrong and why. Be specific about the inaccuracy and include copies of documents that support your dispute.
Send your letter by certified mail with a return receipt requested to document that the credit bureau got it. Then, the credit bureau has 30 days to investigate your dispute and tell you what they found. If the result is a change, they must also provide you with a copy of your updated credit report.