Your credit history plays a pivotal role in determining your financial health. By understanding and analyzing your credit history, lenders can assess your financial credibility.
Simply put, your credit report is a record of your past borrowing and repayments. Maintaining a positive credit history can be crucial in securing loans and other financial opportunities.
What is a credit report?
While many individuals have heard the term ‘credit report’, not everyone fully comprehends its significance and the intricacies behind it. So, whether you’re new to the world of finance or simply need a refresher, let’s delve into what exactly a credit report is.
A credit report, sometimes known as a “credit file” is a detailed record of an individual’s credit activities and history. Think of it as a financial report card that lenders and creditors review to evaluate your creditworthiness.
Key Components of a Credit Report:
- Personal information: This includes your name, address, Social Security number, date of birth, and potentially employment details.
- Credit accounts: It lists out all of your credit accounts, such as credit cards, mortgages, car loans, and other types of loans. This section details when each account was opened, the credit limit or loan amount, account balance, and your payment history.
- Inquiries: This indicates any lenders or businesses that have asked to view your credit report, typically when you apply for credit.
- Public records: Information from state and county courts, such as bankruptcies or tax liens, might be recorded here.
- Collections: If you’ve had debt that’s been sent to a collection agency, it will appear in this section.
Each account listed on your credit reports will show the date the account was established. It will also show your payment history, credit limit, and the type of account (mortgage, installment, revolving, collection), etc.
These reports are compiled and maintained by three major credit reporting agencies or credit bureaus: Equifax, Experian, and TransUnion. Each bureau might have slightly different information about you, depending on their sources, making it vital to review all three reports.
Nationwide Credit Bureaus: Their Role and Significance
The three nationwide credit bureaus, namely Experian, Equifax, and TransUnion, are the gatekeepers of your credit information. These nationwide credit bureaus collect and maintain information about consumers’ credit behaviors. Their reports serve as a primary source for lenders, employers, and other entities to evaluate creditworthiness.
How do I get my free annual credit report?
By federal law, under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your credit report every 12 months from each of the three major credit bureaus (Experian, Equifax, and TransUnion). In addition, several states offer an additional free report per year, including:
- New Jersey
Your free annual credit reports contain the same account information found on a paid credit report: your open and closed credit accounts, and your payment history for each. You’ll generally find payment history for loans, credit cards, and revolving lines of credit. You may also see rental payments if you rent an apartment.
How do I order my free credit reports?
If you are getting your free annual credit reports, you can order them online through AnnualCreditReport.com.
This website will let you order all three of your free credit reports at once, with no obligations and no hidden fees. You may have to provide some personal information to confirm your identity before ordering. However, you will not be charged if you use this site.
If you use these free credit reports to file a dispute, the credit bureau has 45 days to investigate your dispute instead of the typical 30-day timeframe.
Other ways to get a free credit report:
The free annual credit report is available to everyone in the United States. Additionally, if you’ve been denied credit, you can also obtain your credit report for free directly from a credit reporting company.
You have 60 days from the time you are notified of the denial to request your credit report. Your request must also be with the credit reporting agency you used to check your credit.
If you order a free state report, or you get a free credit report due to any of the other factors we’ve talked about, you’ll need to contact the nationwide credit reporting agencies directly. Equifax and TransUnion make it easy to order these free credit reports online. However, to get your free Experian credit report, you may need to call.
Here is the contact information for each credit bureau:
- Free Experian Credit Report – call (866) 200-6020 to confirm eligibility and get your credit report by mail or use this link.
- Free Equifax Credit Report – call (877) 322-8228 and order online through this link.
- Free TransUnion Credit Report – call (800) 813-5604 and order online through this link.
Remember: Keep track of when you order your credit reports and from which bureau(s) so that you know when you’ll be eligible to order your next credit report for free.
Can I get a free credit score too?
Unfortunately, federal law does not mandate that credit bureaus give you a free credit score with your free credit reports. However, Lexington Law Firm offers a free FICO credit score and a free credit repair consultation. You can take advantage of that by visiting their site. There are also several credit card companies that offer free credit reports.
You can often order your credit score alongside your free credit report for an additional fee from the credit reporting agencies. However, these credit scores are considered FAKOs as they are not real FICO credit scores (the credit scores that lenders use).
VantageScore is a credit scoring model that was created by the credit reporting agencies to compete with Fair Isaac. While some businesses and institutions use it, the vast majority still rely on FICO scores to make credit decisions. So, before you pay for any credit score, make sure that it will be useful to you.
If you want to monitor your credit reports and credit scores monthly, you might want to consider a credit monitoring service.
Can I get more than one free credit report per year?
Even if you’ve already ordered your free credit reports, you may still qualify for another one in the following situations:
Negative actions as a result of your credit report such as:
- Being denied for credit or a loan
- Being denied for insurance
- Being passed over for employment
- Being denied a government license or benefit, or having an adverse action for either of these
- Being denied or having an unfavorable action happening on another account (i.e., interest rates raised on your credit accounts, being denied a credit line increase, etc.)
Hardships that make it difficult to maintain positive credit such as:
- You are currently unemployed and are planning to seek employment within the next 60 days
- You are receiving or have recently received public welfare assistance
- You believe that your credit file may be inaccurate due to fraud or identity theft
Advantages of Additional Free Credit Reports
While the federal law provides for a free annual credit report, it might be beneficial to request additional free credit reports to keep a regular check on your financial health and any signs of identity theft. Certain states offer these additional free reports, making it easier for residents to stay updated about their credit status more frequently.
Recognizing Signs of Identity Theft
Identity theft is a growing concern and a menace to individual financial health. Your credit report could be the first place you find evidence of identity theft. Suspicious activities, unfamiliar accounts, or unexplained debts might indicate that someone is misusing your personal information for financial gain. It is essential to frequently review your credit reports to catch these signs early and take preventive measures.
How can I dispute inaccurate information on my credit report?
If you find inaccurate or “questionable” information on your credit report, you can dispute the errors with the credit bureaus. We also offer free credit repair letters, or if you need help getting rid of negative items on your credit reports, you can hire a credit repair service.
Free Credit Report FAQ
How often can I get a free credit report?
You’re entitled to one free credit report from each of the three nationwide credit bureaus (Experian, Equifax, and TransUnion) every 12 months from AnnualCreditReport.com.
What information is included in a credit report?
Credit reports include information about your credit accounts, such as credit cards, student loans and mortgages, as well as any late payments or collections accounts. It also includes personal information, such as your name, address, and Social Security number.
Does checking my credit report hurt my credit score?
No. Checking your own credit report is considered a soft pull, which is not reported to the credit bureaus and has no impact on your credit score.
How long does it take to get my free credit report?
It typically takes about 15 minutes to complete the online form and receive your credit report.
How do I keep track of all three of my credit reports?
You can use a free credit monitoring service, such as Credit Karma, to keep track of all three of your credit reports. These services are designed to help you spot any changes in your credit reports quickly and easily.