When managing your credit accounts, you may find yourself all too concerned only with your credit score. However, it is necessary for you to also pay attention to the more substantial information from which your credit score is derived – your credit report.
What is a Credit Report and Why is it Important?
Your credit report is an important piece of information that sheds light on your overall credit background and how you handle it. It summarizes your creditworthiness or lack of it. Each time you take out a loan or open a new credit account, lenders will base their decision to grant you the loan and the terms involved in your credit report.
Your credit report is built upon the information of the credit behaviors you have done over the years in all your credit accounts. This report is stored in an electronic file and managed by the national credit bureaus. The summary of this report is mathematically represented by a 3-digit number known as credit score. Just by knowing your credit score, lenders can safely assume the potential risks involved in lending you money without going through the details of your credit report.
How is Credit Report Made?
Your credit report is made and maintained by the three major credit bureaus, namely Equifax, Experian, and TransUnion.
Credit bureaus gather credit information regularly from the lenders, businesses, and government agencies you deal with. There are several types of credit information bureaus consider important in order to accurately map out your credit history. These include:
- Bills payment
- Missed payments
- Opening and closing accounts
- New purchases
- Charged-off loans
- Discharged or forgiven debts
- Court judgments
While the three major credit bureaus gather similar credit information about you, they organize, store, manage, analyze, and format the data differently. Hence, the varying ways in which your credit report is presented in a readable document.
When lenders need to make a background check on your credit thoroughly, they will purchase a copy of your credit report from any or all of the credit bureaus. However, as the law mandates, the bureaus will limit the credit information that the report will contain only the most relevant to the inquirer to protect you from identity theft and other types of fraud.
How Do I Get a Credit Report?
You have a legal right to access your credit report. And as a responsible credit manager, you need to monitor the accuracy of the data collected by the credit bureaus from the lenders that send to them. Not obtaining a copy of your credit report and not fully understanding what data should be there is putting your financial health at risk.
You also cannot overestimate the legitimacy and accuracy of the information credit bureaus collect from lenders and businesses. With millions of credit reports being handled, human error is always possible. Any wrong information on your report may result in a downtick of your credit score leading to high interest on loans, disapproval from the tenant screening process, or fewer job opportunities from prospective employers that also look at the status of your credit report.
Likewise, lenders and businesses are not required to send credit information to all major credit bureaus, causing varying credit reports at any given time when you obtain it or when a hard pull is made during a credit check. Because the three credit bureaus are highly independent business entities, they do not have a system in place that syncs data amongst themselves. By monitoring your credit reports from each bureau, you’ll be able to update it as necessary by disputing any wrong information or update it by providing any missed information.
Keep in mind that you can access your credit report for free every 12 months from each of the credit bureaus. You can request a copy of your credit report through phone, mail, or online. When accessing your credit report online, be sure to use only platforms that are legitimate and safe. Annualcreditreport.com is a website put up by the 3 major credit bureaus through which you can order your free credit report.
Here are the ways you can get a copy of your credit report. When making the request, you will need to provide your name, social security number, and date of birth.
You can call the Annual Credit Report Request Service toll-free at 1-877-322-8228 and make the request. Your request will be processed and mailed to you within 15 days.
To request by mail, visit the www.annualcreditreport.com and complete the Annual Credit Report Request Form. You can print a copy of the form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Your report will be sent to you within 15 days from the date of receipt of your request.
For immediate access to your credit report, log on to www.annualcreditreport.com, and follow the procedure for reviewing your report. You can download and print your report for your hard copy. You will repeat this process for each credit bureau report you request.
What to Look For in Your Credit Report?
There are several sections of your credit report that summarizes your credit history and information. Go over each section and look for any data that is inaccurate, incomplete, or not supposed to be there.
Personal Information Section
- Name, address, or phone number
- Prior address if you have not lived long at your current address
- Social Security number or birth date
- Previous and current employment information
- Marital status
Public Records Section
- Lawsuits you were and were not involved in.
- Bankruptcies filed by your spouse or ex-spouse with a specific chapter
- Bankruptcies you recently filed, or you filed more than ten years ago that are not identified by the specific chapter of the bankruptcy code
- Lawsuits or judgments reported more than seven years after the judgment was entered, or after the expiration of the statute of limitations.
- Tax liens you paid more than seven years ago, or criminal arrest records more than seven years old.
- Paid tax, judgment, mechanic’s, or other liens listed as unpaid.
Credit Accounts Section
- Commingled accounts—credit histories for someone with a similar or the same name.
- Account listed as joint, when only or your spouse is responsible for it
- Premarital debts of your current spouse attributed to you.
- An account due to an identity thief’s actions.
- Accounts in which you are an authorized user but are not included in the report
- Incorrect account histories
- Discharged debts that still appear to be owed, such in the case of bankruptcy that you filed or forgiven debts
- A voluntary surrender of your vehicle incorrectly listed as a repossession.
- A missing notation when you disputed a charge on a credit card bill.
- Accounts that incorrectly list you as a cosigner.
- Closed accounts incorrectly listed as open
- Accounts you closed that does not indicate “closed by consumer”
- An account delinquency that occurred more than seven years ago or that does not include the date of the delinquency.
- Incorrect date of delinquency on an account that was charged-off or sent to a collection
- Overdue child support that is more than seven years old.
- Other adverse information that is more than seven years old.
- Hard pulls by creditors without your written permission
How to File For Dispute on Negative Information in Your Credit Report?
When you see erroneous information in your credit report, take action immediately by filing for a dispute. A pending dispute also shows up in your credit report and gives a negative impression to lenders that see it. The sooner a dispute is resolved, the better. And because errors in credit reports exist, be sure to always keep and secure important copies of your credit transactions so you can easily refer from them when the need arises.
Here are the steps that you should take:
- Identify credit report errors. Even a single mistake on your report can impact your credit score.
- Contact the furnisher of the report. Contact the company that provided the wrong information and verify their record in conjunction with yours. The error could be resolved at this point, and they will send the bureaus your updated credit information with the necessary corrections.
- Dispute your credit report’s error. If the error remains unresolved with your report’s furnisher, contact the credit bureaus to inform them and file for dispute. Keep all copies of your dispute letter and other correspondences.
- Allow time for investigation. The dispute process takes at least 30 days or less.
- Follow up after the investigation. When the investigation and dispute have been completed, you will receive a copy of the results of the investigation from the bureaus, as well as a free copy of your corrected credit report. The law also requires that credit bureaus should send out corrected copies of your credit report to any company or anyone who accessed it in the last 6 months or received it in the past 2 years.
Regularly monitoring your credit report is a wise financial habit. You need to protect not only the information that sums up your creditworthiness but also your financial background and identity that is prone to consumer fraud.