How to Read Your Credit Report
A guide to ordering and understanding your credit report.
— -- You have the right to see your credit report for free – and in some cases, you have the right to receive extra reports at no cost.
The Fair Credit Reporting Act requires each of the three major credit reporting bureaus – Equifax, Experian and TransUnion – to provide you with a free report every 12 months. All you have to do is ask.
Ordering Your Report
Use www.annualcreditreport.com, the official site set up under the auspices of the Federal Trade Commission. Avoid sound-alike websites that promise a free credit report only if you purchase other products such as credit monitoring.
Important: Note that the credit report is not the same as a credit score. Credit scores, such a FICO score (previously known as Fair Isaac Corp.), are proprietary and can be purchased separately.
READ: How to Interpret Your Credit Score
At www.annualcreditreport.com, follow the prompts for the free report. You'll need to provide your name, addresses for the past two years, Social Security number and date of birth. The credit bureaus also may ask you for financial info that only you would know, to prevent strangers from accessing your file. The process takes a few minutes and you'll be able to print a copy of your report. You don't have to order all three credit reporting bureaus' reports at once; in fact, some financial experts suggest ordering one report every four months.
You also can order your free reports by calling (877) 322-8228.
Reading Your Report
Again, the report won't give you a score. But it will have info on where you've lived, whether you pay your bills on time, whether you've been sued or arrested and whether you've filed for bankruptcy.
It's important to make sure your report is accurate and to correct any mistakes before they ruin your ability to get credit or insurance, purchase a home or get a new job.
You can also spot identity theft before it gets out of hand.
Your report will list all your accounts, your status with those accounts, and information about your recent activity, credit limits, loan terms, balances and overdue payments.
It also will list any accounts that were referred to collection agencies. Examine these carefully, because it's not unheard of to have someone else's account on your report. If you do have an account that's correctly in collections, arrange to pay off the debt ASAP and then make sure your credit report is updated to reflect that.
Your report also will list public records such as bankruptcies, tax liens, court judgments, collection accounts and in some states, overdue child support payments.
It will also list all the businesses that have received your credit report in the past two years. Only companies that you've given written authorization to are allowed to view your report, so if there's anyone else listed, be sure to investigate.
Correcting Errors
If there's unflattering information on your report that is true, you'll be stuck with it for a while. Accurate negative information stays on for seven years, and bankruptcies remain for 10 years. Criminal convictions can stay on forever. Other info can linger as well, such as an application for a job paying more than $75,000 a year or an application for more than $150,000 worth of credit or life insurance.
Don't believe so-called "credit repair" schemes that claim they can get this stuff off your credit report.
READ: Can Credit Repair Companies Fix My Credit Score?
If you find incorrect information on your report, file a written dispute with the credit reporting bureau and the entity that listed the information. The credit reporting bureaus are required to investigate your dispute, usually within 30 days, unless your dispute is frivolous. After the investigation is done, the credit reporting bureau must give you the written results. If an inaccuracy was corrected, they also must give you a free copy of your report.
If the dispute isn't resolved in your favor, you can ask that a statement be included in your file and in future credit reports.
In addition to your free report every 12 months, you're entitled to a free report if any company takes the kind of adverse action against you that would wind up being reported to credit reporting bureaus, such as denying you credit, insurance or employment. You'll need to request the free report within 60 days of that happening.
You also can get a free report once a year if you're unemployed and you plan to look for a job within 60 days, or if you're on welfare, or if you've been a victim of fraud.
(Source: FTC, Consumer Credit Counseling Service)
