What’s a Credit Report?

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What does it mean to have a credit report, and why do you want a good one? Learn all about credit reports here.

You’ve heard of a credit report, but you aren’t sure what it exactly entails. Once you begin your credit building, loan borrowing and big purchase-acquiring journey, the term “credit report” will start popping up more and more. 

A credit report is a statement that contains essential information about your credit activity and a current, accurate reflection of your credit situation, like how you’re paying back your loans and the status of your credit accounts.

Who Asks for a Credit Report?

The people who will ask for and utilize your credit reports are lenders as this is vital information that’ll help them determine whether you should loan you money for whatever you’re applying for or not, whether it be a homeowner’s loan, a car loan, a student loan or a new credit card. 

Business may use the information they gather from your credit report to decide as to whether to extend insurance to you or not, renting privileges for a house or apartment, provide services like cable, utilities, cell phones networking and more.

A credit report can also be used to make employment decisions about you baring you agree a potential employer to examine this information. Credit reports contain personal information, so this isn’t out of the realm of possibilities to be asked to provide one while applying for jobs.

You don’t need to worry about just anyone gaining access to your sensitive financial information portrayed in your credit reports.  The federal Fair Credit Reporting Act instills restrictions on a credit report’s accessibility and the law dictates exactly how the report can be used.  A few companies and people who can request or have access to your credit reports include:

  •  Credit bureaus

  • Potential lenders

  • Mortgage lenders

  • Utility companies

  • Certain service providers

  • Employers

  • Government agencies

  • Collection agencies

  • Landlords

  • Car insurance companies

What Does a Credit Report Contain?

A credit report contains personal information about you like:

  • Your name, any names you have used in the past for your credit accounts like nicknames, maiden names, ect.

  • Current and former addresses

  • Your social security number

  • Your birth day

  • Any phone numbers you currently use or have used in the past

Your credit reports, as the name suggests, will also contain a cohesive credit history summary of all the accounts, inquiries, details, balances and anything else pertinent to your credit history: 

  •  Current and past credit accounts and their type

  • The names of the creditors

  • The limits and amounts of your past and current credit accounts

  • Account balances

  • Account activity and payment history

  • The date you opened the account and if applicable, the date it was closed

The information released in a credit report goes for both good and negative standing accounts.  Your credit reports will list accounts that are past due as well as the ones that are not.  Credit reports will detail information about liens, wage garnishments and any negative information for seven years, and bankruptcy filings for ten years.

Public records that can be seen on your credit report include:

  • Liens

  • Foreclosures

  • Bankruptcies

  • Civil suits

  • Judgments

If negative information sticks to your credit report like an unwanted piece of gum for seven years, then what about positive information?  You’ll be happy to know that positive information remains on your credit report for an average of ten years. 

Another piece of good news, if you do happen to have some credit information on your report that reflects poorly on you, you do have the opportunity to attach a statement to your report to explain its circumstances.  This statement could give convince otherwise apprehensive potential lenders to give you a second chance, so certainly utilize this option to the best of your ability.

Contrary to popular belief, these reports don’t contain your credit score.  Credit scores are calculated based on the data the reports provide, like the GPA system you knew so well during school. 

The most widely used credit scores come from a company called FICO and lenders base their interest rates on what bracket you fall into.  While the information provided in your credit report helps generate your FICO score, it’s not exactly determined how your credit score is calculated.

How Does a Credit Report Get Updated?

You might be wondering how your credit reports are updated, seeing as how they reflect your current and past credit accounts and their corresponding activities.  Another question frequently proposed along these same lines is: just how often is my credit report updated?

There are three major credit bureaus responsible for credit reports: Equifax, Experian, and TransUnion. Lenders submit the updates for your credit profile to at least one of these three bureaus, but they don’t necessarily report to all three, so your credit reports can vary.  Lenders also report at different times throughout the month, so your credit reports may look different from one another.

With so much data needing to be processed, these three major credit reporting bureaus have different measures in place to handle it all, which is why the average person will almost certainly have more than one credit report to their name. 

Don’t be surprised when you go to check your credit reports if they look different from one another, as it all depends on the lenders reporting to them, if at all, when your lenders report to the credit bureau, and when the credit bureau processes this information into your report.

How to Get a Free Credit Report

The government mandates that you can gain access to your credit reports for free every 12 months from each of the three major credit bureaus.  You can visit the official site, www.AnnualCreditReport.com or access your free reports by phone or mail. 

Remember to make sure you’re on the official site because you’ll be required to provide sensitive, personal information to access your credit reports, and there are similar websites out there that could maliciously obtain your information.

To access your free credit reports online, you’ll first need to enter your personal information like your name, Social Security number, address, and date of birth.  This is to help verify that the credit report is aligned with the person requesting it.  You can order credit reports from all three credit bureaus, TransUnion, Experian, and Equifax.

Using the official site, you’ll be asked to answer security questions on top of providing your personal information to help verify that it’s you who is requesting access to your credit reports. 

These security questions can involve information about your mortgage payment, your auto loan, or other financial situations that presumably only you would know how to address.  If you have trouble answering these questions, you can request your reports over the phone or by mail where you won’t have confirmed your identity in this manner.

Monitor your credit reports as frequently as you can so you can get a good idea of your financial standing.  It’s beneficial to you in part of being fiscally responsible and to better prepare yourself in the face of lenders, landlords, potential employers, and whoever else may request or gain access to your credit reports.

In a similar fashion, check your FICO credit score, too.  Although it gleans information off your credit reports, your credit score is something that your future or potential lenders utilize often, and it’s advantageous for you to get ahead of the curb in case your score could require extra effort.