In the United States, there are three major credit reporting agencies: Equifax, TransUnion, and Experian. These are the groups that lenders use to check the credit worthiness of potential borrowers.
Federal law says that people can get one free copy of their credit report from each of the three credit reporting agencies each year. It's a good idea to check it once a year to make sure there are no mistakes or missing information.
How do you read a report on your credit? There are abbreviations, numbers, and codes that can be hard to understand for people who are seeing them for the first time.
Credit Reports: How to Get Them
Under a federal law that went into effect on September 1, 2005, you can only get a free credit report once a year by going to www.annualcreditreport.com. This is the only place where you are allowed to get a free credit report. If you go straight to the credit reporting agencies, you'll have to pay to see your report, unless you meet other criteria that let you see your report for free (being denied credit, for example).
If you want to check your credit report more often than once a year, you can sign up for reports at any of the three credit reporting agencies and pay about $10 per report. You'll need to look at the report at all three places because the information isn't exactly the same and you need to check for mistakes at all three.
Credit Reports to Read
There are four parts to a credit report: information about who the person is, their credit history, public records, and inquiries made to their credit file.
Your name, address, and social security number are all ways to identify yourself. If you see different versions of your name or more than one social security number, it's because one of your creditors reported it wrong. However, that information should stay on your report because taking it off could hurt the connection between the report and the creditors who use it.
Identifying information also includes the name of your employer(s), the number on your driver's licence, and sometimes the name of your spouse.
There is a list of individual accounts and account numbers in a credit history (which may be encrypted). Information about each account will usually include the date it was opened, the type of credit (mortgage, car loan, instalment, or revolving), the total amount of your loan and the amount you still owe, as well as the account's status (open, closed, paid as agreed, or inactive) and how you've been paying on the account (on time, 30 days late, 90 days late, etc).
You hope that nothing is in the public records section. This part has information about bankruptcies, tax liens, and court orders. This part of your report will hurt your credit score more than anything else.
Inquiries show a list of "hard" inquiries, which are for credit you've applied for and can affect your credit score. However, FICO ignores most inquiries when figuring out credit scores for individuals. "Soft" inquiries are from credit card companies who check your file before sending you promotional credit card offers. Your credit score does not go up or down because of soft inquiries.
What to Do When Your Credit Report Is Wrong
If there are mistakes on your credit report, like the wrong amount on an account or an account that doesn't belong to you, you can fill out the dispute form that comes with a credit report you get in the mail or use a form online to dispute the mistake.
After you file the dispute, the credit reporting agency has 30 days to check the information (or the mistake must be removed). If they say it's right and you still don't agree, you can talk to the creditor directly to get it fixed. If they find out that the information you have disputed is wrong, they have to take it off your credit report.
