Complete Guide on How To Read a Credit Report

A credit report is like a report card for your financial life. Credit reporting agencies prepare these reports using your Social Security number as your key identifier. Lenders (and many other companies you do business with) report to the credit reporting agencies information about your creditworthiness, like whether you've requested to open a new credit account and whether you've paid your bills on time.

Because your credit score plays a significant role in your financial life, it is essential to review your credit report at least once a year to verify that the information on it is accurate. 

Checking your report regularly can help you identify errors so you can correct them, and it can make it easier to spot identity theft. Your report information can also provide insight into whether you may need to make adjustments to your borrowing management. Free and premium credit monitoring apps make it easy to track changes on your credit report and provide access to your credit scores, which are not listed on credit reports. 

But if you want to learn how to understand your credit report, read on.

How to obtain your credit report

The three major credit bureaus that collect credit report data are Equifax, Experian, and TransUnion. The credit reporting agencies prepare a detailed report about your borrowing history. Then, creditors (as well as employers, landlords, and insurance companies — among others) look at the reports to gain insight into whether you are financially responsible.

The first step in understanding how to read your own credit report is learning how to obtain a copy from each of these bureaus. You have a few different options:

• You can visit AnnualCreditReport.com: Federal law entitles you to one free copy of your credit report from each of the three major credit bureaus — Equifax, Experian, and TransUnion — every 12 months. AnnualCreditReport.com is the website you can use to obtain annual copies of your reports. Because you're allowed one free report from each of the credit reporting agencies, you can end up with a total of three free reports by visiting this website and requesting one from each agency. As of 2020, you can now request your free online credit reports weekly. 
• You can visit the Equifax website or call Equifax at 1-866-349-5191: Every person in the U.S. is entitled to obtain a total of six free credit reports from Equifax each year through 2026. 
• You can contact the credit bureaus and request a free report under certain conditions: For example, you are entitled to a free copy of your credit report if you receive a notice denying you credit; if you're unemployed and intend to look for a job within a year; if you're receiving public assistance benefits; if you have a fraud alert in your credit file; or if you have been the victim of identity theft.

  You can obtain your reports by visiting the Equifax website or calling 1-800-685-1111; the Experian website or calling 1-888-397-3742; or the TransUnion website or calling 1-888-909-8872.

What is in a credit report?

Your credit report contains many different kinds of information that is reported by lenders or others with whom you do business. Here are the sections you can expect to see when you obtain a copy of your credit report.

1. Personal information

Your personal details are included as the first key pieces of information on your credit report. This information can include:

• Your name
• Any names you have used in the past
• The address where you live currently
• Previous addresses where you have lived
• Your date of birth
• Your Social Security number
• Your phone number

2. Employment history

Your credit record will also include a list of past workplaces and current jobs. Credit reporting agencies obtain this information when you provide details about your workplace on a credit application.

3. Credit history

Your credit history is typically the longest part of your credit report. It contains key details that lenders look at when deciding whether to loan you money, and that the credit reporting agencies use to assign a credit score.

Some of the key aspects of your credit history that are included are:

• A list of the credit accounts you currently have open
• A list of past credit accounts that you closed within the past seven to 10 years, even those in good standing
• The credit limit on revolving accounts (such as home equity lines of credit or credit cards, where you are allowed to borrow up to a certain amount and you can keep borrowing and paying your balance down repeatedly)
• The total amount you borrowed on installment loans (loans where you borrow a set amount and pay it down over time, such as student loans)
• The current account balance or the amount you currently owe
• Your payment history and whether you have ever been 30 days, 60 days, or 90 days past due on monthly payments
• Whether you have had debt charged off or sent to collection agencies
• The date you opened and closed your credit accounts
• The name of the creditor

4. Public records

If you have legal action taken against you, this can become public record. Your credit report contains certain details from public records, including:

• Whether there are any tax liens on your property: For example, if you fail to pay your taxes, the government may place a lien on the property.
• Foreclosures: You could be foreclosed on if you do not pay your mortgage debt, and the lender moves to sell the home to recoup their funds.
• Bankruptcies: If you declare bankruptcy, this will be listed on your credit report.
• Repossessions: If your vehicle or other secured assets are repossessed by a lender, this will be listed on your public record.
• Civil lawsuits and judgments against you.
• Overdue child support payments if reported by state or local governments or child support agencies.

5. Credit inquiries

When companies access your credit report, this is listed in a section on the report called credit inquiries.

If the inquiry is triggered by an application for credit, this is usually called a hard inquiry. There are also soft inquiries, which are credit checks that occur as part of a general background check but don't affect your credit.

A list of recent hard inquiries helps lenders determine if you are taking on excessive new debt. If you receive too many hard inquiries within a short period, it can cause your credit score to drop and lenders to become cautious about the amount you're borrowing.

Credit report vs. credit score

Your credit report is a detailed record of your borrowing history. It is used to determine your credit score, but it is not the same thing. Credit reporting agencies use many different pieces of information from your credit report to give you a score that lenders can use to quickly assess your creditworthiness and whether you are a responsible borrower.

Credit scores usually take into account things like your payment history, your average age of credit, how much of your available credit you are using, how much credit you've recently applied for, and the types of credit you have.

Each of the credit reporting agencies assigns you a credit score, but there are many different scoring formulas, and individual companies or lenders can create their own scoring systems as well.

When you obtain your credit report, you will not see your credit score on the report. To view your credit score, you will need to explore other options. You can get your score from:

• Free credit monitoring apps like Credit Karma, Credit Sesame, and Experian. The trade-off for free access to your 3-bureau scores could be the apps sharing your data for marketing purposes and pushing you to open new credit cards or upgrade for more security features. 
• Identity theft protection services that include credit monitoring. For example, Aura offers access to all three major credit bureaus with any plan. Most ID theft services limit reporting credit scores to one only. 
• A mortgage scoring notice that a lender sends you after you apply for a mortgage
• An adverse action notice if you apply for and are denied credit
• A risk-based pricing notice if you get credit on less favorable terms than the lender offers to most borrowers
• A financial service provider, as many companies now offer free credit scores to their customers (e.g., Chase offers free scores for anyone who signs up, even if they are not a Chase customer)
• Nonprofit credit counselors, who often provide free scores (there is usually a charge for their services)

Credit report red flags

It is essential to check your credit regularly to identify any errors and to detect potential red flags that may indicate identity theft. Some red flags to watch for when checking your credit report include:

• Accounts you did not open
• Inquiries you do not recognize
• Public records showing liens or judgments against you that you weren't aware of
• A name or address on your credit report that you do not recognize
• Payments you didn't make
• Closed accounts are being reported as open
• Accounts with incorrect balances
• Accounts with incorrect credit limits
• Closed accounts are being reported as open
• Correct payment due date and payment status

Some of these signs would indicate that your identity has been stolen. For example, if a credit account appears that you didn't open, someone likely used your Social Security number to open it. Other incorrect negative items could suggest a simple mistake, such as your credit card issuer reporting a late payment when you actually made the payment on time or reporting the incorrect balance.

If you spot these red flags, you'll want to take action. Dispute incorrect account information and freeze your credit if you are worried someone may have been trying to use your credit information.

How to dispute your credit report

If there are errors on your credit report, disputing the information could help you get this inaccurate data removed. You can report the problem to the credit reporting agencies, which must then investigate whether the info you are disputing is accurate. If it is not correct, it must be removed from your record.

You can dispute your credit report online, via phone, or by mail. The table below shows the contact information for the three credit reporting companies for each method.

Method	Equifax	Experian	TransUnion
Online	Fill out this form	Fill out this form	Fill out this form
Mail	Send this dispute form to: Equifax Information Services LLC P.O. Box 740256 Atlanta, GA 30348	Send a letter explaining the dispute to: Experian P.O. Box 4500 Allen, TX 75013	Send this dispute form to: TransUnion Consumer Solutions P.O. Box 2000 Chester, PA 19016
Phone	Call 800-864-2978	Call 888-397-3742	Call 800-916-8800

You should include documentation with your dispute, including evidence that shows an error, such as canceled checks proving timely payment or an identity theft report filed with the police.

Best credit monitoring services with ID theft protection

Credit monitoring services that offer identity theft protection help you monitor your credit activity and catch fraud before you become a victim of identity theft. Free and premium credit monitoring services often include additional features such as financial account monitoring, dark web monitoring, and credit-building tips. 

FAQs

Bottom line

Checking your credit regularly is necessary to ensure that no incorrect information has been added, which could indicate identity theft.

Ideally, you should review your report every few months to stay informed about your credit history. You can also take additional steps to protect your identity, such as signing up for credit monitoring services that offer advanced security features. That way, you can easily access your credit scores and know where you stand with lenders before you begin the credit approval process. 

Damaged credit can have a big negative impact on your life, so it's worth making the effort to ensure inaccurate information doesn't hurt your finances.