A credit report is a financial statement that hold the history of your credit, spending and personal data that relates to finances.
A credit report is a standard way of viewing and tracking someone’s overall financial history. The financial agencies, or credit bureaus, do this by collecting and storing information submitted about yourself to the agencies, by your creditors.
Example:
Let’s assume you just applied for and opened a credit card account. That creditor likely will run your credit report. Upon your payment date, whether you pay in full, the minimum, a little more than the minimum, or nothing at all, the credit card company reports your activity to the credit bureau(s).
How are credit reports “made”?
Credit reports are collections of details and information that are supplied from creditors to credit bureaus. To put it simply… companies that give you credit report to agencies on all actions – both negative and positive.
Now, once this information comes in, credit agencies then begin to store it. These details can include basics like your name and address. But it could also include details of all credit accounts, who you have applied to and whether you have been denied or not.
A credit report is simply a collection of data about you. There is no one version of a credit report, even though the details are all the same.
That being said, not all of the details may be present in each report. This is because companies offering you credit are not under obligation to provide those details on a constant basis.
How are credit reports used?
Credit reports can be used in many ways.
The main (and very typical) way, is for a new creditor to be introduced to your credit history. This can help them determine if they will extend you credit, how much that credit is, what the interest rates are and what the other terms of a line of credit or loan might be.
Credit reports can also be used for opening new non-credit accounts. Things like your electric and gas bills may use your credit report to determine the down payment (security deposit) or even if the utility company will allow you open an account.
The final thing that credit reports may be used for is employment. If you give consent, a future employer may use the credit report to make a determination on hiring.
What information gets stored on my credit report?
Your credit report usually hold two or more different types of data. The main categories are your personal information, and your financial information.
Personal Information:
- Name (and any names you’ve ever used for account associated to the social security number
- Current and former addresses
- Social Security Number
- Birthdate
- Current and previous phone numbers
Financial Information:
- Current and previous credit accounts (mortgage, open, revolving, etc)
- Each account amount or limit
- Your payment history on each account
- What the current balance on each account is
- Name of the creditor (the credit account)
- Date of the account’s opening
What else?
- Any requests from external sources for a credit report copy (who has asked for credit reports?)
- Negative impact items (liens, bankruptcies, foreclosures, civil suits, judgements, etc)
Is it a good idea to review your credit report? And if so, what exactly should you be looking for?
It is a good idea to review your credit report each year. With the amount of breaches that are seen on a constant basis, keeping track of your financial health is sensible – and free. Once a year, you can receive a copy of your credit report from each of the “Big 3” credit bureaus. There are:
- Experian
- TransUnion
- Equifax
But when you get it, what are you looking for?
The first thing you want to review are your personal details. Is your name correct? Is your surname, if changed, with the correct reasons (marriage, adoption, etc). Are your previous addresses correct?
Next review your open and closed accounts. Are all of these accounts ones that you’ve opened? Are all of the existing accounts opened by yourself? Are any listed as overdue when they are actually current and paid in full?
When information is not correct, you have three options:
- Contact the credit bureau
- Contact the creditor
- Contact both
In many cases, you might have to contact both.
In some cases, you will also have to file a dispute with the credit agency. This will occur when an account is closed, with a balance. When you pay the balance, the creditor is not obligated to immediately notify the credit bureau. Other times, you may have an issue with the account’s details.
The worst case scenario is that you can discover someone has opened a credit account in your name. In which case, you can begin the process of closing the account and working with law enforcement to track the person down.
How can I receive a copy of my credit report?
The good news is that it is fairly simple to receive a copy of your credit report.
Each year, by law, the “Big 3” must provide you a copy for free. You can get more information by calling (877) 322-8228. Or, you can visit https://www.annualcreditreport.com/index.action to receive your credit report as well.
There are other times when you can receive your credit report for free.
Are you on welfare?
Have you been denied an account for a loan or credit card?
Are you unemployed and will be job searching in the next 60 days?
Have you been a victim of identity theft?
The final way to receive your credit report is to purchase it directly from the credit bureaus. These have varying costs, and are parts of different packages.