How to Read Your Credit Report

How to read your credit report
How to read your credit report

Do you know how to read and understand your credit report? Reviewing your credit report is very important to fully understand your financial foundation. Whether you’ve been turned down by a creditor or just want to maintain and build financial health, you should monitor your credit score and your credit report. We’ll show you how to read your credit report and get you on your way to building financial health.

What is a credit report?

You can think of your credit report like a report card for your financial information. It is different from your credit score. Credit score is a number that represents the whole of your credit history. Your credit report contains details of your credit history. This article will detail how to read your credit report and how to understand it.

You may have a challenging time in understanding your report because it contains a lot of information and a history of your financial accounts. Since it is wise to check your credit report from each of the 3 major credit bureaus, you’ll see some differences to each report. We’ll help you by explaining how to read your credit report by outlining the most common details of these reports. You’ll feel better equipped to understand where you stand financially. You’ll also be able to easily to spot red flags that may need attention.

Getting Your Free Report


Woman requesting her free credit report by phone.

By law under the FairCredit Reporting Act (FCRA), you are able to receive your credit report from each of the three largest credit bureaus every year for free. There is a central online resource for these reports, set up by these credit bureaus – Equifax, Experian and TransUnion. You can request your reports at AnnualCreditReport.com or by calling 877-322-8228. You will need to provide some identifying information including your full name, address, date of birth, and social security number. The reports are available from one, two, or all three bureaus. Again, it is a good idea to get a copy from each. Here’s why.

TransUnion, Equifax and Experian each issues their own version of a credit report. These reports contain information about your credit accounts, payment history and the status of your credit accounts. They get this information from other creditors and public records. Since the three agencies may have slightly different information, it’s better to check and read all three credit reports.

What’s in Your Credit Report

Personal Information

This is the section of your report that contains the basics – your name, address, phone number, date of birth, and social security number.

Employment Info

This area may be separate or included in the Personal Information section. It is to help credit bureaus verify your identity.

Consumer Statements

This area may not have information. It is there should you ever dispute an item on your report to the bureau.

Account Info/Credit History

This is a list of all your open credit accounts. This is an important area to review and re-review for accuracy. It contains:

Open accounts (can be for accounts that you don’t use)

Closed accounts (account you have explicitly requested to be closed)

The dates accounts were opened or closed

Payment history

Credit utilization

Current account balance

Loan payment status

Look for any account marked with a “U” which means “unclassified”. This happens when an account has not been updated when the report was pulled. It can mean there was a problem, such as being past due or in collections. It can also mean that the account is brand new and no payments have been paid.

Public Records

This area includes bankruptcies which may hurt your credit. Public records may remain on your credit report for up to 10 years.

Inquiries

This part of your report shows inquiries made for your credit. There are two types of inquiries, soft and hard. Soft inquiries happen when you request your report, or an employer requests your report, or a creditor wants to pre-approve you. Hard inquiries occur when a creditor requests your history like when you formally apply for new credit. For you the consumer, you’ll be able to see both hard and soft inquiries. Creditors don’t see soft inquiries when they request your report. It’s important to monitor this section for fraud.

Keep an Eye Out for Errors!

The Consumer Financial Protection Bureau  recommends you be on the lookout for errors such as:

Identity errors

  • Wrong name, phone number, address, date of birth, social security number
  • Accounts belonging to someone else with the same name or a similar name referred to as a “mixed file”
  • Fraudulent accounts from identity theft

Incorrect Account Status

  • Closed accounts reported as “open”
  • Incorrect reporting as to who is the owner of the account verses an “authorized user”
  • Accounts incorrectly reported as late or delinquent
  • Incorrect dates for last payment, account opened, or first delinquency
  • Same debt listed more than once (possibly under different names)

Data Management Errors

  • Incorrect information reappearing
  • Accounts displaying multiple times under different creditors (especially where there are delinquent accounts or accounts in collections)

Balance Errors

  • Accounts with an incorrect current balance
  • Accounts with an incorrect credit limit

If you spot any errors in any of your credit reports, you want to contact that specific credit bureau. In addition, call the creditor itself (sometimes referred to as the “furnisher” of the information). Your credit report will include directions on how you can dispute mistakes or incomplete information.

Understanding how to read your credit reports is a great advantage in your financial future. Knowing what to look for will allow you to fix any small problems as well as recover quicker from larger identity theft problems. Ultimately, checking your credit report once per year will help your credit wellbeing. Because your credit score is based upon your report, it’s best to start knowing how to read your report.