March 28, 2022 | improving-your-credit
Become a Credit Report Expert
Credit reports serve an important role in today's financial and banking industry. Prepared and provided by a credit bureau, these reports provide a detailed record of your individual credit history and affect whether you can borrow money and how much you’ll pay to borrow that money. They can even impact other aspects of your life, such as getting a job or insurance or renting a place to live.
But what is on a credit report—and how do you make sense of it? We’ll explore the answers to these questions and more in this article.
Fee-Free Banking is Here
Looking for a financial institution that doesn't nickel and dime you? If you live or work in Texas, join Amplify!Fee-Free Banking
How to Get Your Credit Reports
The United States has three major credit reporting bureaus: Experian, Equifax, and TransUnion. They each gather and receive information about consumers’ credit histories, bill paying habits, and other financial details to compile a report.
You are entitled to get a free credit report once every 12 months from each of the three reporting bureaus. Requesting your report is easy—visit AnnualCreditReport.com to get your copy from one or all three bureaus. Note that you don’t have to get all three at the same time; you can request separate credit reports spread out over the year.
Have you already used your free annual reports? You can request more throughout the year for a small fee. By law, the bureaus are not allowed to charge more than $13.00 for a report.
The Fair Credit Reporting Act entitles consumers to also receive a free credit report if a company has taken any sort of adverse action against them, like a denial of credit, insurance, or employment. To be eligible for this free report, you must request it within 60 days of getting notice of the adverse action.
How to Read a Credit Report
Once you get your credit report, you’ll want to look over it to check for mistakes and get a better understanding of where you stand financially. Credit reports contain five main categories of information.
Personal Identifying Information
First, the top of your credit reports will contain your personal information such as your:
- Name, nicknames, or names you’ve used in the past
- Current address, as well as former addresses
- Phone numbers
- Date of birth
- Social security number
When reading your credit report, be sure that all of this information is correct.
Your credit accounts will make up the bulk of your credit report. In this section, you’ll find information like:
- Current and past credit accounts such as mortgages, installment loans, credit cards, other revolving accounts
- The names of your creditors
- When the accounts were opened and closed
- The credit limit or amount
- Your current account balance
- Your repayment history
These factors will also influence your credit score, which is a three-digit number that estimates your credit worthiness. Credit scores are compiled using an algorithm that takes data from your credit report, and the highest score possible is 850.
A bill, loan, or other charge goes “to collections” if you fail to pay it, or if the company fails to receive the payment. If you’ve had an account turned over to collections, it will typically show up on your credit report within the year. Collection items will generally stay on your credit report up to seven years after they first become delinquent— even if you pay off the account.
Having one of these items on your credit report can be really harmful to your overall history and score. The best way to prevent a charge from going to collections is to call the business who originated the charge. A lot of organizations have payment plans or other options that can help you avoid a charge getting sent to collections.
Public records, such as foreclosures, liens, bankruptcies, and civil suits are also included in the report. If a local or state child support agency reports overdue child support payments, that may also appear here.
Each time that you apply for credit, whether it be loans, credit cards, or lines of credit, the creditor will make what is called a credit inquiry. These companies that have accessed your credit report will be listed. Keep in mind that too many inquiries over a short period of time can damage your credit score.
How long does information stay on your credit report?
Generally, negative marks on your credit report will remain there for seven years. This includes information such as:
- Late payments
- Collection or charged-off accounts
Some marks, such as bankruptcies, may remain as long as ten years. Even if you remedy a negative mark (e.g., you pay off a credit card balance that you missed payments on), they may remain on your report.
Active accounts that are paid as agreed will remain on your report as long as the account is open and the lender is reporting it. If you decide to close an account, and the final status is paid as agreed, the positive mark can stay on your credit report for up to 10 years.
What do I do if there is a mistake on my credit report?
See something that isn’t right? Maybe you don’t recognize the company or the amount charged. It’s important to check your credit reports at least once a year because, oftentimes, these reports have mistakes that can actually damage your credit score and make you appear less trustworthy to a lender.
Mistakes can range from credit card accounts that you never opened to slight misspellings of your name. These problems can be caused by something as minor as a typo or as major as identity theft.
Because your credit reports can affect everything from your ability to take out a loan to finding an apartment or house to rent, correcting these mistakes as soon as you discover them is important. You don’t want to wait until you need good credit to fix issues, because it can oftentimes take a few weeks, if not longer, to resolve.
How to Dispute Your Credit Reports
The good news is that credit bureaus and reporting businesses must correct the information for free. To do this, contact both the credit bureau(s) whose report listed the mistake, as well as the business or financial institution that reported the error.
The best way to reach the credit bureaus is to explain what is wrong in writing, fill out their provided dispute form, and include copies of all supporting documents. The credit bureaus also have ways that you can settle disputes online and over the phone.
The Federal Trade Commission offers a handy guide that outlines the exact steps you should take to resolve issues, as well as a great sample letter to send when disputing errors.
If the charge is found to be an error, or the collections agency cannot provide proof that it even owns the debt, it will be taken off your report. Be sure to file a dispute with the other bureaus as well; they do not typically share information.
If you believe that you have been a victim of identity theft, report your case at IdentityTheft.gov for a personalized recovery plan.
Check Your Report Today
Requesting your free annual credit reports to understand your financial history is a great way to make sure your credit remains in good standing. Reading over your report can help you be aware of what lenders see when you apply for credit and give you a starting point if you need to make some changes.
Even if you’re confident that your credit is in good standing, checking your report can reveal errors that you didn’t even know existed. It’s free, and it can be really helpful! If you’re buying a home in the next few years, or applying for a job that requires good credit, check out your report today. The sooner you know where you stand, the better off you’ll be.
Become an Amplify Member
Every Amplify account holder enjoys fee-free banking. That means no overdraft, maintenance, or other banking fees cutting into your pocket.