Lenders and other businesses check credit reports to help decide whether to grant you credit, determine your interest rate, or make other decisions. In addition to lenders, others who may review your credit report include car insurance companies; employers; and cable, internet and cell phone providers.
Three nationwide credit bureaus—Equifax, Experian and TransUnion—collect information about your financial history and prepare it into credit reports. Each of your credit reports can contain slightly different information.
What is a credit report?
A credit report is a detailed breakdown of your financial history that lenders and other businesses look at when making decisions. It contains personal information (like your name and past addresses), account information (like loans, credit cards and checking accounts) and public records like tax liens or judgments.
Lenders use credit reports to help decide whether to lend you money and what interest rate you might pay. Employers, landlords and insurers also might check your credit. You can get a free copy of your credit report from each of the three nationwide consumer reporting agencies — Experian, Equifax and TransUnion — once a year.
You can dispute inaccurate information in your credit report with the CRA. You’ll need to write a letter, explain what you believe is incorrect and ask the CRA to fix it. If your dispute isn’t resolved, you can file a complaint with the CFPB. Credit bureaus are required to correct errors in your credit report within 30 days.
What is a credit score?
Lenders use a credit report and score to determine whether to extend you credit, how much you can borrow and at what interest rate. Your credit report includes personal information such as your name (including previous names), current and past addresses, Social Security number, date of birth, and account information for credit cards, loans and mortgages. The report also shows your payment history, which details your track record of paying debts on time. Public records, such as bankruptcy, foreclosures, liens and judgments, also appear on your report.
A credit score is generated from the data in your credit report by a lender-approved consumer reporting agency. It takes into consideration your overall credit history, how much debt you have, how long you’ve had accounts and the amount of credit you’re using. Most scoring models penalize people who use a high percentage of their available credit, while rewarding those who pay their debts on time. There are dozens of different scoring models and each one has its own formula.
How can I get my credit report?
A credit report contains a summary of the information in your personal credit file, including inquiries, public records (like judgments and liens), account balances and more. You can get a free credit report once every 12 months from each of the three national credit reporting agencies, Experian(r), Equifax and TransUnion.
Lenders, insurers and employers can look at your credit report to see if you’re a good risk for lending money or insurance. It also helps them identify possible identity theft or fraud.
It’s important to check your credit report often. This can help you spot errors, which you can then dispute with the credit bureau or the business that reported the information to the CRA. You can monitor your Experian Credit Report daily and receive alert notifications when key changes occur, such as new accounts, fraud alerts or personal information updates. It can help you detect and respond to identity theft faster. Plus, our Experian Boost product can raise your FICO(r) Score by adding positive bill payment data from services like phone, utility and popular streaming bills.
How can I improve my credit score?
Whether you are new to credit or have suffered from financial challenges, you can improve your score over time by paying on time, keeping debt levels low and adding different types of accounts to your profile. It’s also wise to check your report often to make sure it is accurate and dispute any errors that may be present.
It’s typically best to keep balances on credit cards low, so if you are carrying high amounts of debt on your revolving accounts, try to pay down the balances. Additionally, you might consider asking your credit card companies for a credit limit increase to lower your credit utilization rate and boost scores.
Getting a credit report can be beneficial in many situations, including applying for jobs, obtaining insurance and renting an apartment. You can get a free credit report(Opens Overlay) every 12 months from each of the three major credit reporting agencies. You can find out more about the factors that go into calculating your credit score, how to read your report and ways to improve your creditworthiness at the Consumer Financial Protection Bureau (CFPB) website(Opens Overlay)..