Understand Credit Reports
Think of a credit report as your financial report card.
When you apply for a credit card, a loan to buy a house or car, or a line of credit to pay for a large purchase, the lender will review your credit report. A credit report is basically like your financial report card, and it is used to help calculate your credit score. It provides your bill payment and loan repayment history, the amount of credit you have available, your monthly debts, and other types of information that can help a potential lender determine whether you are a good or bad credit risk.
Understanding what types of information most lenders evaluate is important. They will look at:
- Your bill-paying history,
- How many accounts you have and what kind,
- Late payments,
- Longevity of accounts,
- Collections actions,
- Outstanding debt, and
- Public records.
A credit report lists your personal information and includes a summary of all your past and present credit accounts, as well as inquiries made by lenders into your credit record.
Most credit reports contain four different types of information:
- Date of birth
- Social Security Number
- Telephone number
- Employment information
- Type of accounts (bank card, auto loan, mortgage, etc.)
- Date account was opened
- Credit limit or loan amount
- Telephone number
- Account balance
- Payment history
- List of lenders who accessed your credit report within the last two years
- Dates of inquiries
- Company requesting your credit record
- Delinquency information
- Overdue debt from collection agencies
- Public record information (i.e., bankruptcies, foreclosures, tax liens, garnishments, and legal suits, etc.)
Check out AIE's Interactive Credit Report to learn more about the information that's included on a credit report.
There are three credit reporting agencies (sometimes referred to as "credit bureaus") that can provide your credit report — Equifax, Experian, and TransUnion. You should view your credit report with all three credit bureaus. Each credit bureau receives different info about you from different sources.
Your credit card may report to Equifax, but not TransUnion or Experian. And your cell phone provider may report to one of the other bureaus. The result is that you have three different reports containing different information.
How to request your free credit report
Every consumer is entitled to get one free report a year from each credit reporting agency. To request yours, you must always start here:
www.annualcreditreport.com (or call 1-877-322-8228).
If you go directly to the credit reporting agencies, you may incur a fee.
How to dispute incorrect data on your report
Since your credit score is a calculation based on the history in your credit reports, it's important to verify that everything included in the reports is correct. Credit reporting agencies don't share files, so you'll need to contact each reporting agency to make sure the information about you is correct.
If you find a mistake (e.g. not your account, wrong amounts, payment not shown, etc.) on your credit report, you can correct it or dispute it. Report errors quickly!
You can dispute the information by filling out a form that comes with your credit report or you can call and request this form, or send a separate letter explaining the mistake. Include copies of the credit report with faulty information highlighted.
Contact information for disputes
Disputes by mail only
(P.O. Box 674402 Houston, TX 77267)
- Experian (www.experian.com)
To dispute an item, call the 800-number listed on each individual report
- TransUnion (www.transunion.com)
Call (800) 916-8800
The creditor has 30 days to respond to the discrepancy and remove any error that they admit to. If they do not admit to it and you disagree with this after the dispute, you can file a short statement to be placed on your report. (The creditor cannot try to collect on the account during the dispute).
The law is on your side. If you prove info is incorrect and it is not removed, you can sue for damages, court costs, and attorney fees.
Anyone who obtains your credit report without authorization or gives it to unauthorized persons may be fined up to $5,000 or imprisoned.