Your credit report is one of the most important financial documents because it affects whether or not you can get loans and how much interest you will have to pay on those loans. Because of this, it is very important to understand your credit report.
One of the first things you should know about your credit report is that it is not the same as your credit score. These are not the same thing at all. Your credit score is based on the information on your credit report. This is why it is so important for consumers to keep track of the information on their report and fix any mistakes as soon as possible.
The second thing you should know about your credit report is that it is not just one report. In fact, there are three of them. There are three big companies that keep these records: TRW, Trans Union, and Equifax. Each of these companies keeps a credit file on about 170 million people, based on 2 billion pieces of information.
The law says that you can ask each agency for one copy of your report each year. This can be done online or through the mail. It is smart to check your reports once a year. Your personal information is the most important thing to look at when you check your reports. This information is only used to identify you. It includes your name, current and previous addresses, Social Security number, year of birth, employer, and, if you are married, the first letter of your spouse's first name. No information should be collected about race, gender, religion, salary, medical history, personal assets, personal background or lifestyle, or criminal record.
The information that your creditors give to the major credit bureaus is gathered. This information includes how much credit you can use, if you've been late on payments for 30 or 60 days, and if any of your accounts have been sent to a collection agency. There's room for more. Your credit report may also include things like bankruptcies, foreclosures, liens, and legal judgments against you. For ten years, a bankruptcy will show up on your credit report. After seven years, other bad information is erased.
Then, a credit score is made from all of this information. The higher your credit score, the more likely it is that a lender will lend you money and give you the best interest rates. If your score is low, on the other hand, it may be hard for you to get credit, and if you do, you may have to pay more interest on the loan.
If you are turned down for credit because of your credit report, you have the right to get a free copy of that report. You have to ask for the report, and you have a certain amount of time to do so. Federal law says that the credit bureau that made the report has to send you a free copy if you ask for it within 30 days of getting turned down for credit. Most of the time, the three big agencies will give up to 60 days.
You can get one free copy a year, but you can order as many as you want throughout the year, but you may have to pay a fee for each one. TRW (1-800-682-7654), Equifax (1-800-685-1111), and Trans Union are the three largest credit bureaus in the United States (1-800-888-4213).