Understanding Credit Reports – All You Need To Know
Check the status of your credit health
If you’ve ever applied for a line of credit or a personal loan, it’s likely you’re aware of a report that outlines your creditworthiness based on your history of repaying credit. You can get a free copy of your credit report every 12 months to ensure that the information lenders see is correct.
We’re going to explain how to obtain your free credit report and how to dispute any mistakes you find.
- What’s in your credit report?
- How to obtain a free copy of your report
- How to check and dispute the incorrect listings
- Beware of credit report scams
What’s in Your Credit Report?
Your credit report consists of information about your credit history. That information is collected from other lenders of your past, courts, and other organizations through credit reporting agencies.
Details listed in your credit report:
- Personal details- name, date of birth, current and previous addresses, places of employment, and driver’s license number
- Joint applicants- if you’ve ever applied for credit with the help of another person to co-sign, both of your names appear on the credit contract information
- Credit cards- any information about credit cards you have
- Debts brought up to date- any debts that previously went unpaid and have now been paid or settled
- Defaults and other infringements- may be utility bills or loan payments that are more than 60 days past due
- Credit inquiries- any credit you’ve applied for, including loans you’ve co-signed on
- Debt settlements- any bankruptcies, court judgments, debt settlement, or personal insolvency agreements that are tied to your name
- Credit liability information- information on the type of credit, credit limit, opening/closing dates of the accounts, and the name of the credit providers
- Payment history- the due dates of your credit payments, if you made those payments on time, and dates of any missed payments- these apply to payments not made within 14 days of the due date
- Commercial credit applications- any business loans you may have applied for
Your credit report won’t have information on your payments toward utility bills or phone bills unless you’ve missed payments for more than 60 days.
Defaults on your Credit Report
If you fail to make a payment on your debt, a credit lender may refer your debt to a debt collector and/or report your debt to a credit-reporting agency and ask that they list it as a default on your credit report.
They may only report your debt if:
- The amount in default is more than $150
- They can confirm they cannot contact you
- Your repayment has been past due for more than 60 days
- You’ve been asked in person or in writing to pay your debt
You have a right to be notified that they may cite your report about your overdue amount beforehand. Usually, your agreement with the creditor will explain when and how they will proceed with reporting to a credit agency.
How Long will Defaults be Listed?
A credit default listing remains on your report for 7 years, unless in the case of bankruptcy, which is 10 years. If you pay your debt, the listing will remain, but your credit report will update to reflect your payments.
When you decide to apply for credit down the road, you may be rejected because your credit history shows a defaulted account. If so, credit lenders must explain to you the reason for your rejected application. Learn about DIY credit repair here.
How to Manage if You Can’t Make your Payments
Because credit reports are so thorough, it’s important to keep your payment schedule on time, every time. However, if you’re finding it hard to make payments, talk to your credit lender about negotiating the terms of your agreement. You can also reach out to community initiatives that offer free or low-cost credit counseling services to help you get back on track.
Obtain a Free Copy of Your Credit Report
You have a right to obtain a free copy of your credit report and dispute any incorrect information. You can receive a copy once every 12 months.
You’ll need to provide the following information to get a copy of your report:
- Social Security Number
- Date of birth
How to Check and Dispute Incorrect Listings in your report
Upon receipt of your credit report, you should evaluate all of the loans and debts, and determine if they are actually yours. Also check details like your name and date of birth.
If you find anything on your report that you disagree with, you can file a dispute and ask to have it changed, or at least provide comments on your report. It’s free to perform these changes, however the information must be inaccurate or out-of-date in order for them to make any changes.
Smart tip: If there are loans or credit in your report that you don’t know anything about, you may have experienced identity theft.
Here are some typical mistakes to look for in your credit report and how you can go about disputing them.
Mistakes by the credit-reporting agency
The agency may have reported your name incorrectly:
- Your name or date of birth may be incorrect, or your address isn’t updated
- A debt might be listed twice, or the amount of debt you owe may be incorrect
You can contact the credit agency from which you received the report, and they may be able to promptly fix the error. You can also use a letter along with copies of documents that support your position and send it in to the credit reporting company. They are required to investigate the items in question, typically within 30 days. Here is an example of a dispute letter.
Mistakes made by the credit lender
A creditor may have reported information inaccurately, for example:
- You may have incorrectly been listed as in default of your loan, or the amount past due is incorrect
- They may have failed to notify you about the outstanding debt
- A default listing on your report was placed while the debt was in dispute
- A payment arrangement was in place, terms were renegotiated, and the creditor did not update their records to adequately reflect in your report
- An account was created in error by a third party- otherwise considered identity theft
If you wish to fix this kind of error, follow these steps:
- If you think you have a credit default incorrectly listed against you, contact the creditor first to ask that it be removed. If the creditor agrees it’s incorrect, they will ask the credit-reporting agency to remove the listing.
- If you are not satisfied, use this sample letter and send it to the credit bureau that holds the report with the discrepancy you wish to fix.
- You might be able to freeze your account to ensure that only the lenders can access your account, but no other third parties.
Beware of Credit Report Scams
Don’t search for credit reporting agencies online, as you may find some suspicious links to fake sites that are out to obtain your very personal information. If you’d like to contact your agency online, make sure you physically type in the URL in the address bar, and double check its spelling.
If any business offers you a free credit report, they shouldn’t request your credit card information. Don’t provide that information unless you are clear on why that agency is requesting it.
Never follow an email link that offers a free credit report, or respond to any unsolicited emails about credit reports. It’s likely to be a phishing attack that’s out to receive your very sensitive information.
The following US credit bureaus are listed below:
- Experian| 1-888-397-3742| experian.com
- TransUnion| 1-800-916-8800| transunion.com
- Equifax| 1-800-685-1111| equifax.com
Stay on top of your credit health by checking your credit report annually. Incorrect listings not only affect your access to credit, but can alert you of any suspicious activities, like identity theft.