Your credit report is becoming more important as more businesses look to it to make decisions about you. It used to be that only banks checked your credit report before approving you for a loan or credit card. They used the information in your credit report to decide your loan amount or credit limit.
Now, employers use it to decide whether to hire you or even to give you a promotion or raise. Landlords use your credit report to decide whether to rent to you. Even insurance companies use your credit report to set your insurance rates. It’s more important than ever that you know what’s on your credit report.
You have three credit reports – one from each of the national credit reporting agencies or credit bureaus – Equifax, Experian, and TransUnion. The credit bureaus maintain your credit report by updating it with information from businesses with whom you have a financial relationship.
The information on your credit report will fit into one of five categories: personal information, account history, public records, collection accounts, and credit inquiries.
Personal Information
The first section of your credit report includes information that helps identity you. This includes your name, current and previous addresses, date of birth, and your current and previous employers.
There may be several different spellings of your name. Some may include a middle initial. Some may not.
Your social security number may be included on your credit report. Typically, when you order your credit report, you can request that only the last four digits of your social security number appear on your credit report. This reduces the likelihood of your identity being stolen if your credit report is lost or stolen.
Account History
The account history section will make up most of your credit report. If you’ve had credit accounts for several years, your account history could be several pages long.
In the account history, there is a list of all your open credit and loan accounts and some that are closed. Each account will list:
- The date the account was opened
- The original loan amount or credit limit
- The current loan balance or credit card balance
- The highest loan balance or highest credit card balance
- The type of account, e.g. revolving, non-revolving
- The minimum payment on the account
- A complete payment history, including late payments from the last seven years.
Negative account information should only appear on your credit report for seven years. After that, it will no longer be reported.
Public Record
Hopefully, the public record section of your credit report of your credit report will be clear. This section lists information about serious delinquencies like bankruptcy, tax lien, foreclosure, repossession, or judgment. These are some of the worst entries that can appear on your credit report. Entries in the public record section of your credit report will remain there for seven to ten years.
Debt Collections
If you have accounts that have become seriously delinquent, they may be sent to a collection agency whose sole purpose is to get you to pay the debt. Collection accounts are also detrimental to your credit. When you have collection accounts on your credit report, it sends the message that you don’t pay your bills on time.
Any type of financial account can be sent to a collection agency and included on your credit report. Even an outstanding library fine of $5 can make its way onto your credit report. To keep debt collections from appearing on your credit report, pay all your bills on time.
Credit Inquiry
Each time a business checks your credit report, a record is made of that “inquiry.” All your credit report inquiries are listed in a separate section. There are two types of credit inquiries. First, soft inquiries are made when you check your own credit report, when businesses you already have a relationship with check your credit report, or when businesses check your credit report to send you a promotional offer.
The second type of credit report inquiry is a hard inquiry. Hard inquiries are made when you apply for credit.
Some inquiries may not show up on your credit report depending on who’s checking it. If you’re checking your credit report, you’ll see all inquiries both soft and hard. On the other hand, when you make an application for credit, only hard inquiries will appear on that version of your credit report.
Lenders typically like to see fewer credit inquiries. Too many inquiries could mean that you’re taking on more debt than you can handle or that you’re desperate for credit.
All Three Credit Reports Won’t Be the Same
The three credit bureaus collect data independently of each other. Your creditors and lenders may only report your account to one or two of the credit bureaus. The impact is that not all your accounts will appear on all your credit reports. So, when you view all three of your credit reports at the same time, you’ll see that one report contains information that the other reports do not.
You have the right to an accurate credit report. If you find errors on your credit report, you can submit a credit report dispute to have the inaccurate information removed from your credit report.
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