Credit Reports 101
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Credit reports are an important tool for understanding your financial situation. They provide a snapshot of your credit history, including all of the accounts you have open and how you manage them. Understanding how credit reports work can help you make better decisions about borrowing and managing debt. Credit reports can also help you protect yourself against identity theft and fraud. In this article, I’ll explain the basics of credit reports, including what information they contain, what information it doesn’t contain, why you should get a copy of your credit report, and how to get a copy of your credit report.
What is a Credit Bureau?
A credit bureau is a consumer reporting agency (CRA) who collects all types of facts about how you handle your money. A credit bureau keeps track of when you applied for loans, how much you applied for and received, and how well you do at paying your bills on time.
Also, a credit bureau knows whether you’ve ever left a credit account unpaid and how much you owe to each of your creditors.
Credit bureaus sell your credit information to all kinds of entities for a variety of reasons. Some companies who buy your credit history will try to send you credit card applications. Some will see you’re not a good credit risk and avoid doing business with you.
What is a Credit Report?
A credit report is a detailed record of an individual's credit history. It contains information about your credit accounts, any late payments, and other financial activities that have been reported to the major credit bureaus. It is used by lenders to determine whether to approve you for a loan or other type of financing. Your credit report also helps you identify potential errors and fraud on your accounts. By understanding what is included in your credit report, you can take steps to improve your score and ensure that all information is accurate.
What Information is in your Credit Report?
Understanding what is in your credit report is important because it can affect your ability to get a loan or other financial product. Knowing what is in your credit report can help you make informed decisions about managing your finances and ensure that the information is accurate and up-to-date. Here is a list of things found on your credit report:
Your address and where you’ve previously lived
The creditors you currently owe: loans, charge cards, and more
Past credit accounts
How many times and with whom you applied for a loan
Whether you pay your bills on time
If you’ve filed for bankruptcy or had tax liens in the last 10 years
Other facts about your financial and credit life
Don’t be alarmed when you pull your credit report because credit reports can be tens of pages depending on how many credit accounts you have, how long you’ve had them, and how many accounts you’ve applied for within the last 2 years.
What Information is NOT in your Credit Report?
As important as it is to understand what IS in your credit report, it is just as important to understand what’s NOT in your credit report. Knowing what’s not in your credit report can help you better understand how you can manage your credit and avoid taking actions that do not provide benefits to that end. Here’s a list of things that you will not find in your credit report:
Your employment status
Your salary
Your martial status
Your spouses credit history
Loans you’ve taken off for your 401k
Loans or credit that don’t report to the 3 major credit bureaus
Most open-ended credit accounts (unless past due and sent to a collection agency); phone bill, utility bills, etc
Your bank balances
How to Get A Copy of Your Credit Report?
It’s not difficult to get your credit report. Actually there are quite a few ways to get access to your credit report.
Get Your Credit Report Directly from the 3 Major Credit Bureaus
You can go online to their website or simply call their 1-800 number and request a copy of your report. You’re allowed one credit report per year free of charge from each of the following credit bureaus:
Equifax - The address is, P.O. Box 740241, Atlanta, GA 30374-0241. Their phone number is: (888) 766-0008.
Experian - The address is, P.O. Box 2002, Allen, TX 75013. The phone number is: (888) 397 3742.
TransUnion - The address is, P.O. Box 2000, Chester, PA 19022. The phone number is: (800) 916-8800.
Get Your Credit Report from the a Credit Monitoring Service
Credit monitoring services are designed to help you stay on top of your credit history and protect your financial wellbeing. Unfortunately, they do charge a fee to access their services. However, you will surely get your money’s worth with the benefits they offer.
Majority of the credit monitoring services allow you to pull one report, two reports, or even all three reports at once. Pulling all three reports at once is called a tri-merge score and in my opinion, is the best report to view because everything is in one place making it easy to spot errors.
You can get your credit report from myScoreIQ and myFICO.com. These are two companies that I’ve used and offer to my clients.
myScoreIQ is a paid monthly subscription that you can cancel at anytime. Your subscription includes the following:
3 bureau credit reports and FICO scores every 30 days
Credit monitoring and alerts
FICO score tracker
$1m in identity theft protection
FICO score simulator
myFICO.com is also a paid monthly subscription that you can cancel at anytime. Your subscription includes the following:
1 – 3 credit scores depending on the chosen plan
Detailed credit reports
Updated credit scores and reports every month or every 3 months depending on the chosen plan
FICO credit score monitoring
Various credit score tools and analyses
Get Your Credit Report from AnnualCreditReport.com
The easiest way to get all 3 of these reports without having to visit separate websites, without calling 3 different numbers, and for free is to pull them from www.annualcreditreport.com.
Annualcreditreport.com is a website that provides consumers with free access to their credit reports from the three major credit bureaus – Experian, Equifax, and TransUnion. This service is available to all U.S. citizens and can be used to monitor credit activity and check for errors or signs of identity theft.
It’s not unusual to receive different information from each credit bureau. Banking institutions sometimes utilize just one of the credit bureaus. Therefore, any information they have about your loan habits might only be sent to one credit bureau.
What’s the Difference Between a Credit Report and Credit Score?
Credit reports and credit scores are two different measures of a person's financial health. A credit report is a detailed record of an individual's financial activity, including their payment history, current debts, and other information. A credit score is a numerical summary of the information in the credit report that lenders use to evaluate an individual's ability to repay debt. Understanding the difference between these two measurements is important for anyone looking to obtain financing or manage their finances responsibly.
Why Should You Obtain a Copy of Your Credit Report?
If you want to stay informed about how you’re doing financially in terms of managing loans, payments, and the like, you’ll want to get a copy of your report at least yearly. Many companies look at your credit report before doing business with you, including potential employers, cell phone companies, and insurance providers.
The information in your credit report also determines if you can get a loan and how much interest the creditor will charge on your loan. The better your credit history, the better loan terms you can receive. Your credit report can save you, or cost you, thousands of dollars on large loans like mortgages and car loans.
In the event your personal identification, credit cards, or checking account has been compromised, it’s wise to review your credit report carefully.
In addition, credit reports often have mistakes that can cost you money or even a chance at a lucrative new job. So it’s important to keep track of the information listed in your report and if it reflects you accurately. You can have mistakes eliminated or corrected.
If you want to stay informed about how you’re doing financially in terms of managing loans, payments, and the like, you’ll want to get a copy of your report at least yearly. Many companies now look at your credit report before doing business with you, including potential employers, cell phone companies, and insurance providers.
Final Thought
In order to stay on top of your financial life, it’s important to be familiar with credit reports. Understanding what credit bureaus do, knowing what a credit report is, understanding how to get a copy of your credit report, and knowing when and why to obtain such a report is important for having a successful financial life.
Keep abreast of your money situation by understanding all about credit reports. You’ll be a competent family leader and a savvy money manager if you do!
