What is a credit report?
A credit report is a statement that includes details on your credit activity and credit history. Companies known as credit bureaus, or credit reporting agencies, compile and maintain your credit report. Certain businesses regularly report customer account information to the credit bureaus. This information makes up your credit report.
Your credit report is established once you have an account with a company that reports to the credit bureaus. Don’t assume you don’t have a credit report because you’ve never opened a credit account. You can have a credit report if you’ve been added as an authorized user to someone else’s credit card account, you’ve had a debt collection or public record in your name, or you’ve been a victim of identity theft.
Companies that report to credit bureaus include credit card companies, mortgage and auto lenders, collectors, and cell phone and utility service providers. Credit bureaus also get information from certain courts.
In the U.S., there are three major credit bureaus – Equifax, Experian, and TransUnion – and you have a credit report with each one of them. The bureaus don’t share information with each other. Because of this, your credit reports may be slightly different.
You’ve likely also heard of your credit score. Your credit score is a numerical summary of the information in your credit report. It gives lenders an immediate idea of whether your creditworthiness – the likelihood that you’ll repay a new credit or loan obligation.
What’s the purpose of a credit report?
Credit bureaus are for-profit businesses. They don’t maintain credit records for the good of the public. Credit bureaus compile consumer credit information and then sell it to other businesses who use the information to approve applications and set pricing.
Fortunately, not just anyone can access your credit report. By law, businesses must have a “permissible purpose” for pulling your credit report. Section 604 of the Fair Credit Reporting Act lists the acceptable reasons a business can check your credit report. They include:
- To grant you credit after you’ve made an application
- For employment purposes, if you’ve given written permission
- To underwrite insurance after you’ve made an application
- In connection with a business transaction you’ve initiated
- To determine whether you’re eligible for certain licenses where your financial responsibility is a factor
- In certain child support cases
- As ordered by a court or federal grand jury subpoena
Businesses must let the credit bureaus know why they’re pulling your credit report and agree not to use your credit report for any other reason.
How to get your own credit report
You have a right to know what’s in your credit report. You should check your credit report at least once a year. Doing so keep you aware of the information in your credit report and allows you to ensure your report doesn’t contain errors. If you need to improve your credit score, your credit report is the first place to start since it contains all the information used to calculate your credit score.
Checking your credit report for free
Credit bureaus sell your credit report to you for a fee, but there are a number of places you can get your credit report for free.
By Federal law, you’re entitled to one free credit report each year. The three major credit bureaus offer your free annual credit report through the centralized website – AnnualCreditReport.com.
Certain states also have laws that allow you to receive one an additional free or discounted credit report each year. For your discounted credit report, you should order directly through the credit bureaus.
Other legally free credit reports
Under the Fair Credit Reporting Act, you may also be entitled to a free credit report in certain situations:
- you’ve been denied for a product or service in the past 60 days and your credit report was used in the decision
- you’re unemployed and planning to look for a job within the next 60 days
- you receive government assistance
- you suspect or know that you’ve been a victim of fraud
Order your free FCRA credit report directly through the credit bureau. Each should give you the option to select the reason for ordering your credit report.
Websites that offer a free credit report
A number of free credit score or credit report tools also show one or two of your credit reports or a summary of the information on your credit report, along with the major factors affecting your credit.These include:
- Discover Scorecard
- Capital One
As you’re looking for a free credit report, beware scams or hidden fees. Some services offer a free credit report, but ask for a credit number and enroll you in a trial subscription to a credit monitoring service. With these types of sites, your credit card will be charged for the recurring subscription each month (or other period) if you don’t cancel before the trial ends.
There are imposter websites created to steal your personal information and commit fraud. You can avoid falling for these scams by only using trusted websites to order your credit report – free or otherwise. Don’t click on links sent to you via mail, no matter how urgent they seem. These are often phishing scams aimed at getting your sensitive personal or financial information.
Purchasing Your Credit Report
You can also purchase your credit report directly through the credit bureaus or myFICO.com (the website where your FICO score is sold).
When you request a copy of your credit report, you may be asked a few security questions to confirm that you’re the one that’s checking your credit. These security questions will be related to information on your credit report, i.e. accounts you’ve opened and should be familiar with. For example, a security question might ask for name of the bank that provided your auto loan or the monthly payments on specific loans you have outstanding.
Types of information on your credit report
Your credit report contains a few key types of information.
Personal Identifying Information
Your credit report contains information that’s used to identify you. This includes your:
Name and variations of your name. For example, your credit report may contain your full name, first and last name, and your first and last name plus middle initial.
- Current and previous addresses
- Date of birth
- Social security number
Your credit report could contain variations of your name and previous addresses since this information is reported by companies that you’ve done business with over the years.
Look for variations of your name you’ve never used or addresses that you’ve never lived. These could be a sign that someone else’s information is on your credit report or that a person has fraudulently opened accounts in your name.
Credit Accounts and History
A list of your credit accounts and detailed history is included in your credit report. Shared accounts like cosigned, joint, and authorized user accounts will appear on your credit report. Open and closed, paid and unpaid accounts will appear on your credit report. (Details on credit reporting time limits are below.)
Your credit report will show several details about each of the accounts:
- Name of the creditor
- Type of account
- Full or partial account number
- Date opened
- Last date updated
- Current account status
- Current balance
- Credit or original loan amount
- Highest balance
- Last payment amount
- Payment history
Public Records and Debt Collections
Public records are debt obligations that have been recorded with a court. Foreclosure, repossession, and bankruptcy are examples of public records.
Debt collections are accounts that have been sent to a third-party debt collector for further collection. Any type of account that you’ve defaulted on can be sent to a collection agency. This includes credit cards, loans, and other non-debt bills like utility payments or even parking tickets.
Anytime a business checks your credit report, a record of it is made in the Inquiries section of your credit report. Your credit report will contain inquiries made within the past two years.
There are two types of inquiries. Hard inquiries are from businesses that checked your credit report as a result of an application you made . Soft inquiries are made by businesses that check your credit report to pre-approve you for credit-related products and services.
What information is not on your credit report
Not all your financial and financial information shows up on your credit report. For instance, your credit report does not include the following types of information:
- Bank and investment account balances or activity
- Payday loans or cash advances
- Rent payments (some exceptions)
- Your salary or income
- Certain monthly bills like utility and cell phone payments
- Prepaid cards
- Spouse financial information (except for joint credit and loan accounts)
- Outdated credit information
- Religious preference
- Medical history
- Whether you receive public assistance
- Your credit score (Your credit score is generated based on information in your credit report. It is not automatically included with your credit report but can be purchased separately.)
While some of these things may be included in a loan application, they are not included on your credit report and won’t affect your credit. Banks are not allowed to use certain information to qualify you for financial products. This includes factors like race, ethnicity, religion, and marital status.
How long does information stay on your credit report
The good news is that most negative information will only stay on your credit report for a specific period of time. You don’t have to worry that old credit mistakes will haunt you forever. The Fair Credit Reporting Act dictates how long information, especially negative information, can remain on your credit report.
- Open, active accounts in good standing will remain on your credit report indefinitely.
- Accounts in good standing can remain on your credit report indefinitely, but will generally fall off your credit report after 10 years depending on how long the credit bureaus have decided to report this type of information.
- Most other negative information will stay on your credit report for 7 years. This includes late payments, debt collection, foreclosure, repossession, and paid tax liens.
- Bankruptcy can stay on your credit report for up to 10 years.
- Unpaid tax liens may remain on your credit report indefinitely.
- Credit inquiries remain on your credit report for 2 years.
- Unpaid judgments can remain for seven years or the state’s statute of limitations, whichever is longer.
Dealing with errors on your credit report
It’s never safe to assume your credit report is accurate. Mistakes can wind up on your credit report because of data entry errors or a mixup with someone else’s information.
One in five American consumers has an error on their credit report based on a 2012 study conducted by the Federal Trade Commission. In some cases, errors could hurt your credit score and your ability to get approved for credit cards or loans.
Errors include things like:
- payments reported as late that were actually paid on time
- accounts reported closed that are actually opened, or vice versa
- accounts that don’t belong to you
- inaccurate credit limits or loan amounts
- outdated information
You can spot errors on your credit report by checking it regularly. Read through all the information, checking to be sure it’s accurate.
You have the right to an accurate credit report. You can dispute credit reports errors with either the credit bureau or the company that provided the information to the credit bureau.
To dispute credit report errors, write to the credit bureau (or the information provider) to let them know there’s an error on your credit report. Describe the error and provide any proof you have to support your claim. The credit bureau will investigate your dispute and update your credit report if it finds that there’s indeed an error on your credit report.
How often should you check your credit report?
You should check your credit reports with each major credit bureau (Equifax, Experian, and TransUnion) at least once a year to be sure all the information in your report is accurate and updated.
There are other important times to check your credit report:
- Before making an application for a major credit card or loan
- When you’re getting ready to apply for a job that may check
- Whever you suspect identity theft or fraud
Checking your own credit report does not hurt your credit. You can check your credit report as often as you’d like without affecting your credit score.
Common Myths About Credit Reports
There are some common myths about credit reports that could lead you down the wrong path when you’re managing your credit or working to improve your credit score.
Myth: The credit bureaus are not government agencies.
Fact: Credit bureaus are independent, for-profit companies that collect and sell your credit information. The credit bureaus do have to abide by specific laws in their practices.
Myth: Paying an account will remove it from your credit report.
Fact: When you pay an account, it remains on your credit report based on the credit reporting time limit or the credit bureau’s reporting policy. The zero balance will show on your credit report.
Myth: Closing an account will remove it from your credit report.
Fact: Closed accounts stay on your credit report also based on the credit reporting time limit or the credit bureau’s reporting policy for that type of account. The account status will reflect that the account is closed. Your credit report will show any balance owed.
Myth: Your credit report combines with your spouse’s when you get married.
Fact: When you get married, you and your spouse will each continue to maintain separate credit reports. Any joint credit or loan accounts you have will appear on both credit reports. Individual accounts will only show up on that person’s credit report.