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Credit Report

Consumer credit reports are an essential part of the U.S. credit system. They can make or break your ability to qualify for loans and credit. They also provide all the information that’s used to calculate your credit score. That makes maintaining a clean and error-free credit report crucial if you use credit. Unfortunately, mistakes do happen, so it’s important to review your reports regularly and dispute errors when they occur. This guide will teach you how!

What is a credit report?

A consumer credit report is basically exactly what it sounds like. It’s a report that contains facts about your debt payment history. Lenders use this information to determine if you qualify for loans and credit cards, and what interest rate you pay.

By regularly reviewing your credit report, you can:

  1. Identify reporting errors, so you can dispute the information with bureaus to repair your credit
  2. Spot potential signs of identity theft, such as new accounts that you don’t recognize and credit inquiries you did not authorize
  3. Understand negative items that could be contributing to a lower credit score, so you can take strategic action to build credit

Learn how to review your credit report to identify errors

How to read a credit report

Each bureau maintains their own private version of your report, so they present the information differently. However, they all contain the same six basic sections.

  • Personal information:Your name, current and previous addresses, spouse’s name, date of birth, Social Security Number, telephone number, place of employment, etc.
  • Credit history:Name, identification number, date account was opened, credit limits, current balance, monthly payment amounts, credit and debt repayment history, and payment frequency among other things.
  • Credit inquiries:When you run a credit report, inquiries appear on your report. Bankruptcies, judgments and lawsuits also appear on it. This reveals credit activity to your creditors. This also lists everyone who has asked to see your report in the past two years.
  • Public records:Includes things like bankruptcy filings, tax debt issues with the IRS or your state, and third-party collections accounts.
  • Consumer statements:These are statements of 100 words or less written by you explaining any circumstance that has impacted your credit history.

What should I look for on my credit report?

You really want to look at everything to make sure is correct. However, your main focus should be on negative items. These are things like:

  1. Missed payments
  2. Settled, closed or inactive account statuses
  3. Collection accounts
  4. Negative public records, such as court judgments

These are all the things that a creditor would consider as they review your application for new financing. Negative items make you less “creditworthy” because there’s a higher risk that you won’t pay the debt back.

Keep in mind that almost all negative items eventually expire – nothing in the credit world lasts forever. Negative items fall off naturally after a certain amount of time.

Don’t let challenges with debt ruin your credit! Talk to a certified credit counselor to find solutions that will stop damage to your score.

Credit Report FAQ

How are credit reports created?

The credit bureaus create a consumer credit report whenever the consumer has a debt they are obligated to repay. In most cases, your credit report is created the first time you apply for a loan or a credit card. This creates an account that generates your credit history – a history of payments made on that debt.

In rare cases, the bureaus may generate a report even if you’ve never had a loan or a credit card. This happens if you have a bill or payment obligation that goes into collections. For instance, if you don’t pay your utility bill or have an out-of-pocket medical expense that you thought was covered by insurance. Collection accounts are effectively debt you must repay. So, this can also create credit history, because it’s a debt that you owe.

How do I get a free credit report?

By law, you can download your credit reports for free from each credit bureau once every twelve months.

  1. Go to the website: com.
  2. Answer a few security questions, based on information contained in your report to verify your identity
  3. Use the portal to download your report from each bureau; you can download one report at a time or all three at once

How do I prevent credit report errors?

Errors can occur, but there are steps you can take to prevent them. The most common reason for reporting mistakes is that a creditor gets you confused with another consumer.

  1. Always use the same name on credit and loan applications. For instance, if you use your middle initial on one application, don’t spell out your middle name on another.
  2. Provide your Social Security number on all applications. This prevents mix-ups with other consumers with the same or a similar name.
  3. List current and previous addresses for the past five years. This helps bureaus link together your credit history

How long do credit inquiries stay on your credit report?

There are two types of credit inquiries – hard and soft. Soft inquiries do not affect your credit, but hard inquiries do. A hard inquiry happens when you authorize a credit check as you apply for a new credit card or loan. These hard inquiries remain on your report for two years. However, they only influence your credit score for six months.

How often are credit reports updated?

With today’s technology, many items that appear on your report appear the same day the event occurred. For example, if you authorize a credit check when you apply for financing, the credit inquiry is usually reported within 1-2 days.

Creditors report missed payments every 30 days. If you pay a credit card late buy 5 days, that should not appear on your credit report. However, if you’re more than 30 days late, then the creditor counts the payment as missed. They report that information to the bureaus, then it appears on your report in the next month. Missed payment notifications run 30, 60, 90 and 120 days.

Then at 180 days, the creditor moves the account to charge-off status. This also would appear on your report within the next month. If you pay off the account or settle with the creditor, you should see that information within the next month as well.

Have a question about your credit report? Ask our certified credit counselors now!