Your credit report combines all your credit history information into one document. Credit reports are compiled by the three nationwide credit reporting agencies — Experian, Equifax and TransUnion. Each agency sells its credit bureau report to your future lenders, landlords, employers and others with a stake in an individual’s creditworthiness. Each bureau might have slightly different information if some of your creditors report to only one bureau and not others. For example, if a credit card company only reports to TransUnion, your TransUnion credit report might look slightly different than your other credit reports. Read on to learn what information you can glean from your credit report and how you can dispute errors before they cause financial problems.
What’s a Credit Report?
Your credit report shows how you’ve managed your debt obligations in the past, as reported by your creditors to the credit bureaus. Each account includes information about the type of account, your current balance, your historical balances, your credit limit and payment history, as well as any accounts in collections. Your credit report also includes public records related to your debts, including liens, foreclosures, bankruptcies and civil suits and judgments against you.
How Do I Read a Credit Report?
Federal law allows you to request a free copy of your credit report once every 12 months from each of the three major credit bureaus. You can request all three at once or stagger your requests so that you receive a free credit report from one of the three major credit bureaus once every four months.
Your full credit report does not include your credit score. Typically, you have to pay to check your credit score, but sometimes you can snag a free educational credit score from your credit card companies or from a credit report service that includes access to both your credit report and score.
The following graphic shows how to read a credit report:
Your personal information isn’t used to calculate your credit score, but it’s important that it’s correct. Errors might cause someone else’s accounts to show up on your credit report, which can bring down your score and help you identify fraud and identify theft.
This section of your credit report lists events like bankruptcies, liens, foreclosures and judgments, which are public records. The public records are limited to finance-related records, so criminal arrests and convictions aren’t included.
Each trade line you have open is listed in the accounts section, along with pertinent information related to that account, including:
- Account status, such as open, negative or closed
- Account type, such as revolving line of credit or installment loan, for example
- Balance information: Monthly balance, high balance and revolving credit limit or initial installment loan amount
- Creditor’s contact information
- Payment history showing how many times payments were 30 days, 60 days, 90 days or 120 days late
Inquiries refer to when a legitimate business requests your credit report. Inquiries can be “hard” or “soft.”
Soft inquiries refer to your credit report being pulled by someone other than a prospective lender, such as when a company pulls your credit score on its own to see if it wants to extend a promotional offer or if it is checking your score when you’re already a customer. Soft inquiries have no effect on your credit score, so checking your own score won’t hurt it.
Hard inquiries refer to when your credit score is pulled because you have applied for new credit, such as a new credit card, car loan or mortgage. Unlike soft inquiries, hard inquiries can have a small negative impact on your score.
How to Dispute Credit Report Errors
Both the credit bureau and the creditor reporting the information to the credit bureau are responsible for ensuring that the information is correct. To maximize your rights under federal law, you’ll want to contact both to report errors and fix your credit report as quickly as possible.
Write to the Credit Bureau
Credit bureaus must investigate any items you question, usually within 30 days, unless the dispute is frivolous. The Federal Trade Commission even has sample forms you can use to get started. Follow these steps to file a dispute by writing a letter to the credit bureau reporting the information:
- Include your name and address in the letter to the credit bureau. Also, identify each piece of information you believe to be incorrect and why you dispute the information.
- Request that the incorrect information is corrected or removed from your credit report.
- Make a copy of your credit report and highlight or circle the information you are disputing.
- Make copies of any evidence that supports your claims, and include those copies, not the originals, with your letter.
- Make a copy of the packet of information you are sending, then send your letter and attachments via certified mail so you can document what you sent.
Write to the Creditor
You should also write to the creditor that is reporting the incorrect information to the credit bureaus. If the creditor continues to report the same information in the future, it must let the credit bureau know you are disputing it. Follow these steps to file a dispute by writing a letter to the creditor:
- Identify each piece of information you believe to be incorrect and why you dispute the information.
- Request that the incorrect information is corrected or that the creditor stop reporting the incorrect information to the credit bureaus.
- Make copies of any evidence you have to support your claims and include those copies, not the originals, with your letter.
- Make a copy of the packet of information you are sending, then send your letter and attachments via certified mail to the creditor’s address listed on your credit report.
Michael Keenan contributed to the reporting for this article.