Understanding Your Credit Report: What Every Consumer Should Know

Your credit report is a detailed record of your credit history that lenders, landlords, employers, and others use to evaluate your financial reliability. Understanding how to read and interpret your credit report is essential for managing your financial health and catching errors that could be hurting your credit score. This guide walks you through everything you need to know about your credit report.

What Is a Credit Report?

A credit report is a summary of your credit history compiled by one of the three major credit bureaus: Experian, Equifax, and TransUnion. Each bureau maintains its own database of credit information, which is why your reports from each bureau may differ slightly. Lenders and creditors report your account activity to these bureaus, which then compile the information into your credit report.

The Four Sections of Your Credit Report

1. Personal Information

This section contains identifying information about you, including your name (and any variations), current and previous addresses, Social Security number, date of birth, and current and previous employers. This information is used to identify you and is not used in calculating your credit score. However, errors in this section, such as addresses where you have never lived, could indicate identity theft or mixed files.

2. Credit Accounts (Trade Lines)

This is the largest and most important section of your credit report. It contains detailed information about each of your credit accounts, including:

• The name of the creditor and account number (usually partially masked)
• The type of account (credit card, mortgage, auto loan, etc.)
• The date the account was opened
• Your credit limit or original loan amount
• Your current balance
• Your payment history (on-time, 30 days late, 60 days late, etc.)
• The account status (open, closed, paid, charged off, etc.)

3. Credit Inquiries

This section shows who has accessed your credit report. There are two types of inquiries: hard inquiries and soft inquiries. Hard inquiries occur when you apply for credit and can affect your score. Soft inquiries occur when you check your own credit or when companies check your credit for pre-approval offers. Soft inquiries do not affect your score. You should review this section to ensure all hard inquiries were authorized by you.

4. Public Records and Collections

This section contains negative public record information such as bankruptcies, and collection accounts. Previously, tax liens and civil judgments appeared here, but as of 2018, these items are no longer included on credit reports. Collection accounts that appear in this section can significantly damage your credit score.

How to Get Your Free Credit Reports

Under the Fair Credit Reporting Act (FCRA), you are entitled to one free credit report from each of the three major bureaus every 12 months. You can request these reports through AnnualCreditReport.com, the only federally authorized source for free credit reports. You may also be entitled to additional free reports in certain circumstances, such as if you have been denied credit, are unemployed and seeking employment, or believe you are a victim of identity theft.

Common Credit Report Errors to Look For

Studies have shown that a significant percentage of credit reports contain errors. When reviewing your reports, look for:

• Incorrect personal information: Wrong name spelling, addresses you never lived at, or incorrect Social Security number
• Accounts that are not yours: May indicate identity theft or a mixed file with another consumer
• Incorrect account status: Accounts showing as open when they are closed, or incorrectly marked as delinquent
• Wrong credit limits or balances: These errors can affect your utilization ratio
• Duplicate accounts: The same debt listed multiple times
• Outdated negative information: Negative items that should have aged off your report
• Incorrect payment history: Payments marked as late when they were on time

Your Rights Under the Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) provides important protections for consumers:

• Right to dispute: You can dispute any information you believe is inaccurate, incomplete, or unverifiable
• Investigation requirement: Credit bureaus must investigate disputes within 30 days
• Removal of unverified items: If an item cannot be verified, it must be removed
• Notification: You must be notified if information in your credit report is used against you
• Access: You have the right to see everything in your credit file
• Accuracy: Credit bureaus must correct or delete inaccurate, incomplete, or unverifiable information

How Long Do Items Stay on Your Credit Report?

Different types of information remain on your credit report for different periods:

• Late payments: 7 years from the date of the missed payment
• Collection accounts: 7 years from the original delinquency date
• Chapter 7 bankruptcy: 10 years from the filing date
• Chapter 13 bankruptcy: 7 years from the filing date
• Hard inquiries: 2 years from the inquiry date
• Positive accounts: 10 years after the account is closed (or indefinitely if still open)

Get Help With Your Credit Report

If you have found errors on your credit report or have negative items that may be inaccurate or unverifiable, The Credit Repair Guy can help. Our team specializes in disputing credit report errors and helping consumers improve their credit profiles. Schedule your free consultation to get started.