How To Read My Credit Report
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Your credit report is an official record of your credit history. Whenever you apply for a loan or credit card, lenders and issuers look at your credit report to determine whether you qualify. The healthier your credit report, the more likely it is you’ll be offered better products and interest rates, so reviewing your report regularly is very important.
However, reading and understanding your credit report may not be easy. In addition, you might not know how to identify errors and possible signs of identity fraud. In this article, we’ll walk through the main sections of your credit report, show you what to look out for, and suggest a few professional agencies that can provide you with additional help.
How To Get Your Credit Report For Free
Usually, you should never have to pay to see your credit report. Once every twelve months, you can request a free copy of your credit report from each of the three major credit bureaus, Experian, TransUnion, and Equifax. You can do this online at AnnualCreditReport.com.
How To Read Your Credit Report
Different credit bureaus will have different ways of structuring your credit report, but in general there are four main sections:
- Personal Information
- Account Information
- Public Records
- Credit Inquiries
For each section, we’ll give tips on what you should pay attention to. As you make progress through your credit report, take note of the specific areas where you think something may have been reported incorrectly.
Typically, a credit report will begin with your personally identifiable information (PII). This includes your:
- Legal name(s)
- Date of birth
- Social Security Number (SSN)
- Current and past addresses
- Employment history
- Phone numbers
What To Pay Attention To
Verify that all your information is entirely correct:
- The most common errors people usually find are with incorrect addresses or employer information. This may be a sign that the credit bureau has mistaken you for someone else, or it could be a case of identity theft.
- If you have multiple names or nicknames, you may see these variations show up on your credit report if you have used them to apply for credit (i.e. Jim Doe, Jimmy Doe, James Doe). This is normal. However, any name that is misspelled or unrecognizable should be a red flag. Pay especially close attention to this if you have a common name or share the same name with a family member.
The main section of your credit report is the Accounts section, which gives a detailed overview of your credit history. Every single one of your credit accounts from the last seven to ten years (open and closed) will be listed here along with the following information:
- Type of account (i.e. credit card, mortgage, student loan)
- Date of account opening and closure, if applicable
- Credit limit or loan total
- Recent account balance & highest account balance
- Payment history (including late payments)
- Co-signer information
Multiple aspects of this section can play a big role in determining your credit score. For example, payment history accounts for 35% of your FICO Score. This means that any reporting errors here could significantly boost your credit score if they are fixed.
What To Pay Attention To
Start off by ensuring that you recognize all the listed accounts:
- Take note of suspicious accounts that you don’t recall opening.
- Sometimes, you may see an account that’s listed as open but should be closed, and vice versa.
For the accounts that you do recognize:
- Verify that all the information is accurate and up to date, especially credit limits, loan totals, and outstanding balances.
- The most important and time-consuming part should be checking your payment history. In particular, you’ll want to notice any late payments that you actually paid on time.
- Sometimes, you may accidentally be listed as the owner of a credit account when you are an authorized user.
- Take note of your closed accounts. If the account was in good standing and there are no negative marks associated with it, then you should leave it alone. However, if it has negative information, it may be possible to appeal to the credit agency and remove it from your report.
This section will list any public records related to debt, such as:
What To Pay Attention To
Anything that is reported here is a serious negative to your credit score, so ideally this section is empty. However, if you do see something misreported here, be sure to note that down immediately.
One important point here is that only public records relating to debts can show up in this section. Examples of public records that should not show up here include:
- Tax liens (credit agencies stopped reporting this in 2018)
- Speeding tickets
These public records should not affect your credit. If you see them on your credit report, note that down.
This section lists all lenders or creditors that have requested your credit report over the last two years. There are two types of inquiries:
- Soft inquiries: When you or a current creditor checks your report, this is a soft inquiry. These do not affect your credit score.
- Hard inquiries: When you apply for a new credit card or loan and a creditor checks your report, this is a hard inquiry. These can lower your credit score by a few points in the short-term.
What To Pay Attention To
Since only hard inquiries affect your credit score, we can ignore the soft inquiries. For each listed hard inquiry:
- Ensure that each one is the result of you actually applying for a new credit card or loan. Hard inquiries should not show up unless you have explicitly authorized a creditor to pull your credit report.
- Verify the date. Typically, hard inquiries should disappear from your credit report in two years.
Other Sections (Consumer Statements)
Sometimes, you may see additional sections in your credit report. The most common addition is the Consumer Statements section, which shows up if you have disputed something on your report before. If your dispute was rejected, you have the option to provide a statement here to give lenders context on any negative information in your report.
What To Do About Incorrect Information On Your Credit Report
By now, you should have gone through your entire credit report and made notes on what is outdated or inaccurate. If everything looks correct up to this point, that’s great! You can simply focus on improving your scores.
Otherwise, you’ll want to dispute these inaccuracies. For each error, this typically involves the following steps:
- Gather evidence to support the dispute. For example, you might use a credit card or bank statement to dispute a late payment.
- Write one letter to each credit agency and creditor involved with the dispute. The Consumer Financial Protection Bureau offers sample letters to help you get started.
- Mail the letter to each credit agency and creditor. You can find the addresses for the three major credit bureaus on the Federal Trade Commission’s website.
Once the credit bureau receives your letter, they usually must complete an investigation into the dispute within 30 days.
Professional Services To Help You Read and Repair Your Credit Report
It’s definitely possible for you to read through your credit report and dispute all inaccuracies by yourself. However, hiring a professional service to guide you through this process can be a good idea for many reasons:
- You want professional and individualized guidance.
- You are unsure whether something on your credit report can be disputed.
- You are potentially dealing with a case of identity theft.
- You need help writing dispute letters.
- You want personalized tips on how to improve your credit score.
Choosing the right service can give you peace of mind knowing that they will handle disputing errors on your behalf. However, don’t just sign up for any service. Here are three proven professional services that you should consider.
Credit Saint is one of the most popular credit repair services. To get you started, they offer a free consultation where an expert will walk you through your credit report and note down potential areas of dispute. After you sign up for one of their monthly plans, they will help you dispute these errors.
Credit Saint is particularly suited for those with more credit problems that may require a longer time to fix.
Lexington Law is a legitimate law firm that specializes in credit repair. As they only hire attorneys, this can give you the assurance that a professional is handling your case. They also offer a free initial consultation before you choose from one of their three monthly plans.
Lexington Law is great for those with fewer credit problems that still require disputes.
Credit Assistance Network
Credit Assistance Network is a smaller credit repair agency that can offer you more personalized advice. After a free consultation, you can decide whether to sign up for their service, which charges per successful dispute.
Because of this pricing model, Credit Assistance Network is probably not for you if you have many items to dispute. However, they do not charge if they are unsuccessful with the dispute, so there is that extra layer of insurance.
Conclusion and Next Steps
Experts generally recommend reviewing your credit report annually, particularly if you are trying to repair a bad score. As such, learning how to properly read your credit report and dispute errors is an essential skill to learn.
We highly encourage you to request a copy of your credit report today and review it for errors. Should you find any, you can then decide whether to dispute them yourself or hire a professional service for more guidance.
When doing research, Credit Help Info relies on credible and authoritative sites. These research sources are provided so that you can see exactly where we get our information.
About the Author
Chris Morgan is a credit expert and founder of Credit Help Info. He has been featured in Addition Financial, GOBankingRates, MSN Money, Yahoo Finance, and many other publications. He has read hundreds of books and resources on finance and the credit industry. Because he did this, you don’t have to. As a school teacher for over 20 years, Chris enjoys taking complicated material and breaking it down into manageable information that’s easy to understand.