Most people know they have a credit score. Fewer regularly review the document that helps create it—their credit report.
Your credit report is one of the most important records of your financial life. It can affect whether you're approved for a mortgage, auto loan, credit card or rental housing. It may even influence insurance rates or employment opportunities in certain situations. Because so many financial decisions rely on the information it contains, it's important to review your credit report regularly and make sure it's accurate.
What Is a credit report?
Your credit report is a record of your credit history and financial activity. It contains information about how you've managed credit over time, including loans, credit cards and payment history.
The three major nationwide credit reporting companies—Equifax®, Experian™, and TransUnion® LLC—collect this information from lenders, creditors and other businesses to create individual credit reports.
Companies use your credit report to help determine whether you're likely to repay borrowed money which may be secured by collateral such as a car or home. They may also use it to decide the interest rate they'll offer, how much credit they'll extend or whether they'll approve a loan application.
Some of the organizations that your credit report may be reviewed by could include:
- Banks and credit unions
- Mortgage and auto lenders
- Credit card companies
- Utility providers
- Cellphone companies
- Insurance companies
- Landlords
- Student loan providers
- Debt collection agencies
- Government agencies
- Prospective employers (where permitted by law)
- Anyone legally authorized through a court order
A positive credit report showing consistent, on-time payments and an amount of manageable debt can make it easier to qualify for financial products and services. A poor credit history may make borrowing more expensive—or prevent approval altogether.
Why should you check your credit report?
Your credit report isn't just important because lenders use it—it also may contain mistakes.
Incorrect account information, duplicate payments, outdated balances or even fraudulent accounts can negatively affect your credit history. Finding those errors early gives you the opportunity to dispute them with the credit reporting company and correct them before they create larger and ongoing financial problems.
Reviewing your credit report annually is one of the simplest ways to monitor your financial health and help protect yourself from identity theft.
How can you get a free credit report?
Federal law allows consumers to obtain free credit reports from the three nationwide credit reporting companies mentioned above. The official website for requesting credit reports is AnnualCreditReport.com. You can also request reports by calling 1-877-322-8228.
Because each credit reporting company collects information independently, the reports won't necessarily be identical. For the most complete picture of your credit history, consider reviewing reports from all three companies.
What's the difference between a credit report and a credit score?
Although they're closely related, a credit report and a credit score are not the same thing.
A credit report contains the detailed history of your credit accounts, payment history and other financial activity.
A credit score summarizes much of that credit report information into a three-digit number—typically ranging from 300 to 850—that helps lenders quickly evaluate your credit risk.
Generally speaking:
- Higher scores indicate lower lending risk to a financial services company.
- Lower scores may make it more difficult to qualify for credit, receive favorable interest rates or obtain more favorable insurance premiums.
Each credit reporting company uses its own scoring models, so your score may vary depending on which agency is calculating. Unlike your annual credit report, obtaining and checking your credit score is not always available at no cost. However, some financial institutions may include free credit score access as part of their online banking services or credit card benefits. Research your financial services providers to determine if they will provide this information for free.
If you're offered a "free" credit score from an email, online advertisement, website, text message or other source, read the terms and conditions very carefully. Some of these purported “no cost” offers may automatically enroll you—without you realizing it—in paid monitoring services or subscriptions unless you cancel.
What should you look for on your credit report?
After receiving your reports, review each one carefully for accuracy, since inaccurate information can harm your credit rating.
First, verify your personal information and confirm your:
- Name is spelled correctly.
- Current and previous residential addresses are accurate.
- Telephone numbers are correct.
- Other identifying information is current and true.
Next, review your financial accounts and make sure you recognize every:
- Credit card
- Loan
- Financial institution
- Creditor
Verify that payment histories, balances and account statuses appear up to date and accurate.
It is also important to look for errors. Watch for critical issues with essential details such as:
- Duplicate payments
- Missing payments you've already made
- Incorrect balances
- Wrong dates
- Accounts that don't belong to you
- Incorrect creditors
If you find an error, document it carefully and gather evidence to substantiate how it is wrong before beginning the dispute process with a credit reporting agency.
Thoughtfully watch for signs of fraud. Because it’s so detailed, your credit report may reveal evidence of identity theft before you notice it elsewhere. Look for:
- Accounts you never opened
- Credit inquiries from companies you don't recognize
- Loans you didn't request
- Credit cards you never applied for
Any unfamiliar activity deserves immediate attention and investigation and should be disputed with either the credit reporting agency or the financial institution which provided the information. If you suspect some of the activities are based on identity theft, also report it promptly to the government agency the U.S. Federal Trade Commission (FTC) at 877-FTC-HELP, 1-877-ID-THEFT, or online at ReportFraud.ftc.gov. Besides the FTC, internet-related crime may also be reported to the U.S. Federal Bureau of Investigation‘s (FBI) Internet Crime Complaint Center (IC3). Identity theft can also be reported to state and local government authorities such as the local police; for some states, fraudulent activities are often reported to the state’s attorney general’s office.
What if your credit information is inaccurate and you need to dispute it?
Consumers have important rights regarding the accuracy and use of their personal financial information under national legislation, specifically the federal Fair Credit Reporting Act (FCRA).
According to the federal government agency the Consumer Financial Protection Bureau (CFPB), the FCRA promotes the accuracy, fairness and privacy of information maintained by consumer reporting agencies. Among other protections, the law gives consumers the right to review their credit reports, dispute inaccurate information with credit reporting agencies and have legitimate errors investigated. Researching and understanding these protections can make it easier to resolve problems if inaccurate information appears on your report.
To correct mistakes with a credit reporting agency, specify and dispute the incorrect information in the report with the major credit reporting bureau (or bureaus) that have the inaccurate information. Read details about handling credit report disputes on Delta Community’s blog in a detailed post comprised of two parts, Part 1 and Part 2.
Make reviewing your credit report part of your annual financial checkup
Your credit report represents your financial reputation. Taking time to review it each year can help you identify mistakes, detect possible fraud and better prepare for future financial decisions.
Whether you're planning to buy a home, finance a vehicle, apply for a credit card or simply monitor your financial health, checking your credit report is a smart habit that requires only a small investment of time.
Because annual credit reports are free, make reviewing yours part of your yearly financial planning.
Want to Learn More About Credit and Personal Finances?
Delta Community's Financial Education Center offers free webinars and workshops covering practical financial topics, including credit, budgeting, identity theft prevention and money management.
Visit the Financial Education Center's Events & Seminars page to explore upcoming educational opportunities and register for our no-cost, on-demand webinars.
The Credit Union's blog also features additional articles on credit reports, credit scores, fraud prevention and other topics designed to help you make informed financial decisions.
