When was the last time you took a look at your credit report? Whether you’re just learning how to look up your score or whether you want to improve it, we’ll give you a crash course on everything you need to know about your credit report. We’ll go over where you can get all of your reports, how to read them and how to use them. We’ll also give you a few more tips to boost your score.
Overview: What is a Credit Report?
A credit report is a document that contains information about how you use credit. Credit reports list things like your bill payment history, any loans you have and some of the loans you’ve had in the past. They also include information on where you live, any legal judgments you have against you and whether you’ve ever declared bankruptcy.
Credit reports help lenders decide whether they want to issue you a loan. If you have plenty of positive items on your report (like on-time payments and closed loans), banks and lenders will likely see you as a responsible borrower.
However, if you have too many negative items (like a foreclosure or multiple missed payments), banks and lenders will be more hesitant to work with you. This can make it harder to get loans for buying a home, going back to school or even opening a new credit card.
The items on your credit report make up your credit score. Your payment history, the amount of available credit you use and the age of your accounts all go into calculating your credit score. The more positive items on your report, the higher your score will be.
Who is Reporting My Credit?
Every month, creditors, banks and lenders across the country submit information to credit reporting bureaus. Credit reporting bureaus collect, store and organize this data. They also issue credit reports using the information that lenders, banks and other institutions provide.
There are laws that control how credit reporting bureaus can use and store your data. For example, under the Fair Credit Reporting Act, a credit bureau must investigate any dispute you make about an item on your report.
There are three major credit reporting bureaus: TransUnion, Equifax and Experian. Each bureau stores and reports your data. Let’s learn more about each credit reporting bureau.
Experian is a credit reporting bureau that issues credit reports and scores. Experian’s credit reports place an increased emphasis on when the items on your report will expire.
Many people believe that once something is on their credit report, it’s there for life. This actually isn’t true — both positive and negative items expire over time. When you look at your Experian report, you can see exactly when the item will leave your report. This can help you decide on the best time to apply for a loan.
Your Experian report should be the first credit report you view if you’ve made financial mistakes in the past and you’re itching for a fresh start.
Another credit reporting bureau, Equifax focuses on providing you with an easy way to view your credit information. Equifax is the only credit reporting bureau of the major three that lists the status of your loans and accounts as “closed” or “open.”
This makes it much easier for you to see which outstanding accounts you still need to pay down and it’s also a good way to spot errors. In other words, an account could be listed as open when it’s supposed to be closed. Your Equifax report is a good place to start if it’s the first time you’ve ever read a credit report.
The final credit reporting bureau, TransUnion, also issues credit reports and scores. TransUnion lists each of your accounts as either “satisfactory” or “adverse.” If your account is in “satisfactory” condition, it means that it’s either paid in full or your payments are up to date. If your account is in an “adverse” condition, it means you’re behind on your payments.
Unlike other credit reports, TransUnion uses a color-coded system to tell you how late your overdue payments really are. You may see a yellow, orange or red box with a number that ranges from 30 to 120 on your adverse accounts. This is the number of days your payment is overdue. So, for example, if you see a credit card loan and a red box with the number 90 in it for July, it means that your payment due in July is 90 days late. This system can be useful for helping you quickly figure out which accounts you need to prioritize to rebuild your credit score.
How Do I Read My Credit Report?
Credit reports have a lot of information on them, so breaking your credit report down into more manageable “chunks” can help you better understand what you’re looking at and spot errors. You can get a free copy of each of your credit reports once every 12 months by visiting https://www.annualcreditreport.com/.
First, take a look at your personal information. Make sure that your name is spelled correctly, your birthdate is accurate and your address is current.
Next, check your employment history. It may be in its own section or it may be part of your personal information, depending on which report you’re reading. If you’ve changed jobs since your latest report was issued, you may want to dispute this information.
You’ll see your accounts list after your employment history. Accounts can include the open date, credit limit, loan amount, balance, payment terms and history of any type of loan or credit line current or in the past. Take a look at each individual account and keep your eyes peeled for the most common credit reporting errors. The accounts section is the most likely place to spot misinformation on your report. You might find:
- Accounts that belong to someone else with a name that’s similar to yours.
- Accounts listed as late or overdue that you paid on time.
- Accounts that you don’t remember creating (a common sign of identity theft).
- Accounts listed more than once.
- Accounts that you closed voluntarily listed as “closed by lender.”
Next, the public records section includes information on legal actions taken against you, including bankruptcies, foreclosures, tax liens and civil judgments. Make sure that none of the information listed belongs to someone else with your name.
The last section on your credit report is the hard inquiries section. When a lender, bank or credit card company checks your credit, it does a “hard inquiry” and views your credit report. Make sure you recognize all of the recent hard inquiries on your account. Unrecognized hard inquiries are another telltale sign that you’re a victim of identity theft.
How Do I Handle Errors on My Credit Report?
Do you see an error on your credit report? Don’t panic. You can easily and quickly dispute items on your credit report online for each of the three major bureaus. Under the Fair Credit Reporting Act, each bureau must investigate your disputes — and remove them if they can’t produce evidence to back them up.
- You can create an account to file a dispute with Experian or by calling the individual number listed on your credit report. Numbers vary depending on your state, so double-check before you dial.
- Visit Equifax’s dispute center or make a dispute by phone at 1-866-349-5191.
- To file a dispute with TransUnion, create an account with its dispute center. You can also make a dispute by phone at 800-916-8800.
You’ll need to report each error with every bureau and individually with all three bureaus if you have an error that’s present on all of your credit reports.
How Can I Improve My Credit Score?
After you’ve disputed any incorrect items on your report, it’s time to create a plan to improve your scores. Here are a few tips to get you started.
Use a Credit Monitoring Service
Credit monitoring services help keep an eye on your credit by alerting you to new items that appear on your reports. These services can help you increase your credit score by catching instances of identity theft before they can do serious damage. When you open a Zero-Fee Checking account with MoneyLion, you have access to easy credit monitoring services.
Build a Better Budget
Are you actively working to pay down your debt? Or are you taking a “see-what-happens” approach to your household finances? Relying too much on credit cards and loans to pay your bills can cause your score to shrivel up.
If you don’t already have a household budget, sit down with your finances and create a plan to tackle your debt. Assign a “job” to every dollar in your paycheck and ration your money as soon as you get your next deposit. Even a single extra payment a month can do wonders when it comes to reducing what you owe.
Consider a Secured Credit Card
If your credit score is low, opening a new credit card might not seem like a great idea. But a secured credit card can actually help to raise your score. When you open a secured card, you put down a deposit that becomes your line of credit.
So, for example, if you open a secured card with $500, you’d have a $500 line of credit. The credit card company holds your deposit until you choose to close the card. After that, a secured card works exactly the same as a normal credit card. You make purchases, pay your bill off every month and the credit card company reports your payments.
This is a win-win for both you and the provider. You get to see an increase in your score and your lender gets to earn interest with less risk. Consider opening a secured card to push your credit to the next level.
Controlling Your Credit
Keeping great credit is about more than just checking your score every once in a while. To raise your score, you need a plan of action. Do you have a plan in place for your credit? Creating a budget, writing down your bill due dates and reporting any errors on your credit report are three actions you can take today to start on the path to better credit.
MoneyLion can help with credit monitoring services and easy score checks. Download the MoneyLion app today from the Google Play or Apple App store to get started.