What is a credit report and what does it contain?

Back in the day, when you applied for credit you would list all of your creditors on the application. The bank or whomever was deciding whether or not to extend you a line of credit would then call all your creditors to verify that you were good for your money. For obvious reasons that was not the most efficient and effective means to verify someone’s credit worthiness. In the 21st century, creditors will look at your credit report in order to decide whether or not to extend credit.

A credit report is an “official” record of your credit activities. I say “official” because they are widely accepted as testaments to people’s credit activity but can often times contain mistakes. What do I mean by credit activities? Credit card accounts you hold and any loans you may have as well as the balances and your payment history on all of them. If you are habitually late that obviously looks bad. If you are habitually late and a creditor has had to take action against you that looks horrible!

The credit report has information pertaining to your place of residence, how and when you pay bills, whether you have had a debt turned over to a collector, and whether you have filed for bankruptcy. You may recall signing up for a service that verified your identity by pulling information from your credit report (eg You have a mortgage through which of these 4 companies?). To break down what a credit report contains into 4 different categories:

• Identifying Info: Your full name and any aliases you may have gone by, your current address and any past addresses, social security number and any alternates that have been used in conjunction with your informaiton, birth date, your current and past employers, and, if you are married, similar information about your spouse.
• Credit Information: Accounts you hold with pretty much everyone including banks, utility companies, credit card issuers, retailers, and any other types of loans such as mortgages and student loans.  As previously mentioned they will also have aditional info for each account such as the date the account was opened, your credit limit/loan amount, co-signers if any, and a 2-year pattern of payments.
• Public Record Information: Any court records pertaining to tax liens, bankruptcy, or monetary judgements. Some reporting agencies will even list non-monetary judgements.
• Recent Inquiries: A 1-year history of the names of those who have obtained copies of your credit report  (two years for employers).

NOTE: This does not include a credit score. A credit score is the numeric number that encompasses your creditworthiness in one number. When you get your free credit report you will be offered the ability to get a credit score for around $10 extra. Is it worth it? It depends if you need to know your score or not (are you about to buy a home?). At most times you can just go for the report.

The consumer reporting agencies sell your information to creditors, insurers, potential landlords, potential employers, courts, 3rd parties you request, etc. However, do not be fooled by “potential employers.” A company that is considering you for a promotion or reassignment may repull your credit report. It is not a one time deal. The same thing goes for insurers; they may check your credit report when they are reviewing your policy not just when they are opening a policy.

This one report may affect your ability to purchase a car, own a home, or get a job. Pretty important, huh?

How to get a copy of your credit report

The Fair and Accurate Credit Transactions Act (FACTA) gave the three main credit reporting agencies an obligation: to create a mechanism that allows consumers free access to their credit report annually. With that in mind, Equifax, Experian, and Trans Union joined forces and created AnnualCreditReport.com (phone # 1-877-322-8228). You are entitled to one free report from each of the agencies every year. To optimize your monitoring you should stagger your requests and do 1 free report from 1 of the 3 agencies every four months.

When I lived in Maryland I learned that state laws guarantee you additional free credit reports. Other states that have a bearing on your credit reports? Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont. Check your state laws to see what you are guaranteed!

Also, please note that if you are ever denied credit for any reason from any lender you are eligible to receive a free credit report. You are allowed to request it via phone, email, or snail mail.

Be wary of sites like FreeCreditReport.com. They will give you a free credit report but automatically enroll you in a credit monitoring service that charges you a monthly maintenance fee. However, if you are out of free credit reports from AnnualCreditReport.com and have faith in your ability to cancel a free trial, you can snag an extra credit report for free.

Credit Reporting Agencies

If you need to contact any of the three credit reporting agencies, here is their information:

• Equifax – www.equifax.com – 1-800-685-1111
• Experian – www.experian.com/consumer – 1-800-311-4769
• Trans Union LLC – www.transunion.com – 1-800-888-4213

Checking Your Credit Report

There are a few things you should do as soon as you get your credit report.

• Make sure all of your personal information is correct. Is your name, address, social security number, employers, etc accurate? If not, it may be possible that someone has opened up fraudulent accounts using a variation of your information or even acquired a job with your information.
• Next, look at the credit information. Are all of the accounts recognizable? Have you opened them all? Are there any unexplained debts on your legitimate accounts?
• Are there inquiries that look suspicious? Have companies that you have not authorized checked your credit recently? This may be an indication that fraud has occurred. However, this does not necessarily mean that fraud has occurred since companies often times inquire about a consumer’s creditworthiness for marketing efforts (that is how you get targeted credit card offers in the mail!). These inquiries are usually designated as such, though, to make it easier for you to distinguish between them and legitimate pulls.

NOTE: If anything looks fishy at all, even if you are not positive it is fraud, contact the credit bureau you received the report from immediately. If they research the issue and find that it is fraud they should fix your report and propagate it to the other reporting agencies. And if they don’t? You will be checking your report from another agency in 4 months so you will find out!

Establishing a Credit History

If you find yourself in a situation where you have had a loan or credit card denied your first step should be to check if there has been fraud committed. If your credit report is clean, then what?

You need to establish credit, and I will go over a lot of good ways to build a solid credit history in a future post!

Disclaimer

The related links were provided for your convenience. I do not control or guarantee the accuracy, relevance, timeliness, or completeness of your credit report. Further, the inclusion of links to Annual Credit Report and the credit reporting agencies are NOT sponsored.