Credit can impact many aspects of your life. The information in your credit report can affect your ability to get approved for a credit card, take out a mortgage or even rent an apartment. Let’s look at what a credit report is and what information it contains so you can understand what it means for your finances.
What is a credit report?
Your credit report is a record of your credit activity. It can include information about past and current loans and credit, such as account opening dates, credit limits and payment history.
Credit reports can give lenders an idea of your financial habits. They can use the information to predict how likely you are to pay bills on time, determine whether you’re approved for loans or lines of credit and decide what interest rate to offer you. Other businesses, such as landlords and utility companies, might check your credit report to decide whether they want to offer you a service. Employers sometimes perform a credit check to learn more about a potential hire.
There are three major credit bureaus in the U.S. that generate credit reports. These agencies collect data about your debt and payment history provided by creditors you’ve worked with (also called “furnishers”), such as mortgage lenders, banks or credit card issuers. Each creditor may not report to every credit bureau, so your reports may look slightly different.
How to get your credit report
By law, you’re entitled to 1 free credit report from each of the 3 major credit bureaus every 12 months. Currently, the 3 major bureaus allow access to free weekly online credit reports. That means you can request 1 report from each bureau every week. You can request your credit reports online, over the phone or by mail.
How to read your credit report
Your credit report includes sections detailing your personal information, credit accounts and history, public records and credit inquiries. The report may be organized a little differently depending on the credit bureau, but in general, here's what each section involves:
Personal information: This section includes basic details, such as your name, address, Social Security number and date of birth. You may also find information about past and present employers. Your employment history doesn't affect your credit; however, it can help confirm your identity.
Credit accounts: This is typically the longest section. You'll see information about open and closed accounts, including credit cards, mortgages, student loans, personal loans and car loans. Accounts you’re an authorized user on or loans you co-signed for may appear here, too.
For each account, the report may include information about the type of account, when it was opened, when it was closed (if applicable), the lender's name, the credit limit or loan amount, the current balance and payment history.
Public records: Public records in your credit report can include any legal information about your debts, such as bankruptcies, foreclosures or tax liens. Non-financial public records, like arrests, won't appear on the credit report.
Credit inquiries: Two types of credit inquiries can appear on your credit report – hard credit inquiries and soft credit inquiries. Only hard credit inquiries can affect your credit score.
Hard credit inquiries can occur when a lender pulls your credit report. You can trigger a hard credit pull when you apply for a loan, apply for a new credit card, request a credit increase or even apply to rent a home. A hard inquiry can typically stay on your credit report for up to two years.
Soft credit pulls can occur when you’re prequalified for a loan or credit card, request your own credit report or when an employer conducts a background check. Like hard inquiries, soft inquiries can typically appear on your credit report for up to two years, though they don’t affect your credit score. Potential lenders won’t see soft inquiries – only you can see them when you view your credit report.
Statements: Your credit report can also include your consumer statement – an optional statement you can make to clarify any information that appears in your credit report.
You can add a statement to explain the reason for missed payments or communicate other relevant information about the activity on your credit report.
What to look for when evaluating your credit report
Knowing how to review your credit report can help you spot fraud and errors. Here are a few tips to keep in mind while reading your report:
Ensure all your personal information is accurate: Look for errors, including misspelled names, multiple birth dates, unfamiliar addresses and incorrect contact information. Check for inaccurate employment information, too.
Examine your account information closely: Look for errors in account names, balances, credit limits, payment history, closed accounts that are listed as open, open accounts that are listed as closed and other inconsistencies in your account history. Ensure that every account on the report belongs to you and is one you recognize – unfamiliar accounts could indicate fraud or identity theft.
Ensure accuracy of public records: Check that any public records on your report are yours.
Look for unfamiliar credit inquiries: Strange credit inquiries could indicate someone is trying to create fraudulent accounts using your personal details. Keep track of your loan and credit card applications and compare them against the inquiries on your report.
What to do if something looks off
Credit report errors can negatively impact your credit score, so it’s important to actively look for mistakes.
If you spot an error, you can dispute it. To dispute an error, contact the credit bureau that reported the information by mail, phone or online. You can also dispute the error with the company that provided the data to the credit bureau.
If you think you’re a victim of credit card fraud or identity theft, you can take additional steps to protect your credit.
Fraud alert: You can place a fraud alert on your credit report to let creditors know that you might be a victim of fraud. You can request a fraud alert by contacting any of the major credit bureaus. Once you’ve requested a fraud alert with one credit bureau, that bureau will notify the other two.
A fraud alert requires creditors who access your report to verify your identity before opening an account in your name, making it harder for people to create fraudulent accounts using your personal details.
Credit freeze: A credit freeze blocks prospective lenders from accessing your credit report. This can help prevent anyone from creating new accounts in your name – normally, lenders will not extend credit if they can’t access your credit history. You must contact all three major credit bureaus if you want freezes on all your reports. A credit freeze is free and remains in place until you ask for it to be lifted.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
