What is a credit report?

Definition and Example of a Credit Report

How Does a Credit Report Work?

Credit Reports vs. Credit Scores

How to Obtain Your Credit Report

Definition and Example of a Credit Report

A credit report is a detailed summary of your credit activity, including your loan repayment history and the status of your current accounts. A credit report is a digital or paper document that shows a detailed breakdown of your credit activity. In your credit report, you can see your bill payment history, current loans, lines of credit, and other financial information. Your credit report will also display negative marks such as missed bill payments or bankruptcy filings. Your creditors provide your information to the three major credit bureaus – Equifax, Experian, and TransUnion – which use this data to create and maintain your credit report.

How Does a Credit Report Work?

Creditors like lenders and credit card companies provide your information to credit bureaus, which use this financial data to create your credit report. Creditors may not report your activity to every credit reporting agency, so you may see slightly different reports from each credit reporting agency.

The credit report you see from Equifax, Experian, and TransUnion may look slightly different from each other, but they will show you similar information. Here’s what you will see in your credit report:

• Identification details: including your name, date of birth, current and previous addresses, phone number, and social security number.
• Credit activity: your current and historical accounts. The report will reveal the type of account, such as installment or revolving credit, the amount of your loan or credit limit, and your account balance. It will also show the name of your creditor and when you opened or closed the account and your payment history.
• Accounts in collections: If you have missed payments on any debt and it has been sold to collection agencies, it will show that in your report.
• Public records: This includes bankruptcies, liens, foreclosures, civil suits, judgments, or past-due child support.
• Credit inquiries: If a lender has run a hard credit inquiry to check your report, it will appear in the report. Allowing a large number of credit checks in a short period can be a red flag for lenders.

Lenders typically look at your credit report when determining whether you qualify for a loan or line of credit, as well as the interest rate they will offer you. If you have a history of missed payments or bankruptcy, the lender may deem you a high risk for obtaining a loan.

Correcting Errors in Your Credit Report

When reviewing your credit report, you may come across inaccurate information. If you find errors, you can dispute them by sending a letter to the credit bureau reporting the error, or by filing a dispute online. The Federal Trade Commission provides a sample letter that you can use as a template.

If the information is indeed inaccurate, the credit bureau is required to remove it from your credit report. If the information is correct, it will remain as is. Most negative information, such as accounts in collections, typically stays on your credit report for seven years.

Some negative marks, such as Chapter 7 bankruptcy, can remain on your report for up to 10 years.

Freezing Your Credit Report

If you’re concerned about data breaches or identity theft, you can restrict access to your credit report by requesting a credit freeze. When you freeze your credit report, creditors cannot access it, making it difficult for identity thieves to open an account in your name.

You can request a credit freeze online, by phone, or by mail for free. You will need to lift the freeze before you can obtain a new loan or credit card. You can lift the freeze permanently or temporarily as needed.

Reports

Credit vs Credit Scores

While your credit report contains a lot of information about your financial activity, it does not show your credit scores. Credit scores are calculated by third-party companies based on the information in your credit report.

There are two common credit scoring models: FICO and VantageScore, both of which range from 300 to 850. You can check your credit scores for free through a credit monitoring service or your bank. Alternatively, you can pay for a service like myFICO to view your FICO scores.

In addition to checking your credit report, many lenders look at your credit scores when making a decision to approve a loan or credit card. For example, mortgage lenders often take the middle score of your Experian, Equifax, and TransUnion scores when evaluating your creditworthiness. So if your scores from those bureaus are 700, 710, and 720 respectively, the mortgage lender will use your 710 score.

How to Obtain Your Credit Report

You can request a free copy of your annual credit report from the three major credit bureaus or at AnnualCreditReport.com. This site is the only government-authorized source for accessing free credit reports.

You can also get one free credit report per week from Equifax, TransUnion, and Experian until December 2023 at AnnualCreditReport.com.

You are also entitled to a free copy of your report if a company takes negative action against you, such as denying credit or insurance. You must request your free copy within 60 days of the negative action.

There are also some other circumstances under which you’re entitled to a free credit report, including receiving public assistance, being a victim of identity theft, having a fraud alert on your file, or being unemployed and planning to look for a job within 60 days.

Key Takeaways

Your credit report is a detailed account of your credit activity, including your current and past accounts, loan balances, and payment history. The three major credit bureaus – Equifax, Experian, and TransUnion – create your credit report from the information they collect from your creditors. Lenders review your credit report when evaluating your application for a loan or line of credit. You can request a free copy of your credit report from AnnualCreditReport.com, but you’ll need to use a separate service to access your credit scores. Negative items typically remain on your credit report for seven years, but you can have them removed if they are a result of errors on the report.

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Source: https://www.thebalancemoney.com/what-is-a-credit-report-5272021