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What is a credit report?

Dinesh S — Wed, 14 Aug 2024 12:40:14 +0000

What is a credit report?

A credit report is a document that summarizes your credit history, including information about your credit accounts, payment history and any public records. Credit reports are used by lenders to assess your creditworthiness, or your likelihood to repay a loan.

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The purpose of a credit report

A credit report provides you with information on your past and present debt and can serve to inform prospective lenders about your financial habits.

A credit report is a document from one of the three credit reporting bureaus, TransUnion, Experian or Equifax. It contains a detailed history of your financial activity involving credit and debt. Credit reporting has been used for generations, but the modern credit report including a credit score emerged in the late 1980s.

For individual consumers, a credit report serves as an in-depth document with information tied to your use of debt. This could include rental or mortgage contracts you have held, credit card accounts, auto loans, student loans and more.

For banks, credit issuers, and other other organizations that may loan you money, a credit report provides insights to inform whether you are a good risk and will repay the debt. Under the federal Fair Credit Reporting Act, organizations allowed to access a credit report upon request include but are not limited to:

Employers
Government agencies
Collectors and other organizations to whom you owe debt
Rental property owners

Credit reporting bureaus can also send your report to others such as insurance companies. Legal professionals may request your file in cases involving court orders, subpoenas or child support.

Why does a credit report matter?

The purpose of a credit report is to provide an unbiased assessment of your financial history involving debt. Past generations relied on handwritten notes and handshake agreements. The modern financial system depends on the credit report as the definitive report documenting your behavior with credit.

A credit report can serve as a benchmark illustrating past financial habits, factors impacting your credit and opportunities for improving your credit history and, ultimately, credit score. For example, for those with good credit, a credit report provides validation with tangible dates, credit types and examples of timely payments. For those with modest to poor credit, a credit report provides details on cases in which payments have been missed or accounts that might be maxed out.

Who provides a credit report?

In the United States, there are three major credit bureaus that provide credit reports:

Equifax
Experian
TransUnion

These credit bureaus collect information about your credit history from creditors and other sources, and they store this information in your credit report. Your credit report includes information about your credit accounts, payment history, and any public records. You are entitled to a free copy of your credit report from each of the three major credit bureaus at least once per year. You can request your free credit reports from AnnualCreditReport.com.

What information is in a credit report?

A credit report contains detailed information that is helpful and informative if you know how to use it. Each reporting bureau provides reports that look a bit different. Here’s an overview of the different sections of a credit report.

Account overview

This section lists all of the accounts, both open and closed, associated with credit taken out in your name including mortgages, home equity lines of credit or student loans. The report breaks this information into line-item detail so you can see individual summaries of the debt you hold and the overall portfolio of debt in your name. This is often summarized in a table, pie chart or both with details such as:

Number of loans in each debt category
Balance owed
Credit available (where applicable)
Credit limit
Debt to credit ratio
Amount of monthly payment
Number of accounts with a balance owed

Account history

Each credit report contains details on how long you have had a credit history, typically listed in years and months. It might also contain some high-level insights, such as the average length of time for which you’ve held each type of debt listed. Some credit reports include the name of the very first company that extended your credit, as well as the name of the most recent company to extend credit.

Inquiries and requests to view your report

This section of your report tells you how many organizations have requested to look at your report over a set period of recent history. It also identifies the names of some or all of the organizations that have made such a request.

Some of these might be familiar to you (for example, if you have recently applied for a credit card at your local bank), while others might be unfamiliar.

Public records

Traffic tickets, civil claims and other payments made (or owed) to a government agency can appear on your credit report. This section details payments you have paid out in full as well as any debt you owe to an agency.

Credit Accounts In Good Standing

Your credit report provides a detailed history of your engagement with debt. This includes active accounts which you are still paying and closed accounts successfully paid down. You see a chart or table for each account in your name, along with accompanying information such as:

Company name providing credit to you
Company address
Date you took out credit
Type of credit extended
Total credit extended (or credit limit value)
Monthly payment
Responsible party (or parties) for paying down the debt
Date on which this debt started to be included on your credit report
Most recent date on which status of this debt got updated on the report

Credit accounts with potentially negative items

Credit reports are intended to be an independent and verified source of information about your financial history and can contain potentially negative information. This can inform you of the things that might keep you from getting a higher credit score or otherwise limit your ability to secure a loan. The document also helps banks and others seeking to extend credit understand whether they can expect to be paid back.

If someone has committed identity theft or another form of fraud using your identity, this can jeopardize your private personal information and damage your credit report and credit score. It’s important to read this section with an open mind to understand where you might make improvements in your financial habits and also identify potential errors that need to be corrected. Details included in this section include:

Creditors that have told the credit reporting bureau you owe them money
Notes on the specifics of your case (for example, details on whether your bill has been sent to collections)
Balance owed
Information on whether you have disputed a claim (for example, in cases of fraud)

Personal details

Your credit report contains personal details that help to establish the accuracy of the records it contains. Common data points listed in your report include:

Name (or names, if you go by a nickname or a maiden name on some of your accounts)
Social security number
Year of birth
Spouse or co-applicant on some or all credit
Employers
Telephone number
Home address
Any other addresses on file from your past (e.g. apartments, single-family homes, etc.)

Miscellaneous

Other details sometimes accompany your credit report. You might find more information about disputing something on your report if you suspect identity theft has occurred. Additionally, you might find a summary of your legal rights under the Fair Credit Reporting Act and even in the state where you live. These details might not deal with your specific financial situation but they are good to keep on file in case you have questions or concerns in the future.

The benefits of understanding your credit report

It’s important to read your credit report like a contract or another important financial document. It may be tempting to scan or skip over parts, but a full understanding of the information on your report can help you understand what you may or may not be a good candidate for a loan or credit card. The benefits of reading your credit report thoroughly include:

A better understanding of your overall financial health
Greater visibility into how lenders may view you as a credit risk
Faster access to red flags in the event your identity is compromised

How often should you review your credit report?

At least an annual check-in is advisable. Many people choose to check their credit report and credit score monthly or even more frequently.

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How can I improve my credit report?

There are a number of things you can do to improve your credit report.

Pay your bills on time. This is the most important thing you can do to improve your credit report. Late payments can have a significant negative impact on your credit score.
Keep your credit utilization low. Your credit utilization is the percentage of your available credit that you are using. A high credit utilization can lower your credit score. Aim to keep your credit utilization below 30%.
Get a credit builder account. A credit builder account is typically a type of secured account that helps individuals with little or no credit to build their credit history by reporting their on-time monthly payments to the credit bureaus. It can help you improve your credit score and learn about credit.
Dispute any errors on your credit report. If you find any errors on your credit report, you should dispute them immediately. You can dispute errors online, by mail, or by phone.

Be patient. It takes time to improve your credit report. Don’t get discouraged if you don’t see results immediately. Just keep making good financial decisions and your credit report will improve over time.

In a nutshell

A credit report is a vital document that lenders use to assess your creditworthiness. It contains information about your credit history, such as your payment history, credit utilization, and debt load. It is important to understand your credit report and to dispute any errors that you find. You can also take steps to improve your credit score by paying your bills on time, keeping your credit utilization low, and managing your debt.

Your credit report is a powerful tool that can help you achieve your financial goals. By understanding your credit report and taking steps to improve your credit score, you can make it easier to get approved for loans, credit cards, and other forms of credit.

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The value of seeing your full credit picture

Dinesh S — Wed, 14 Aug 2024 12:25:01 +0000

The value of seeing your full credit picture

Seeing and understanding your full credit picture empowers informed financial decisions. It allows you to identify inaccuracies, manage debt responsibly, and negotiate better terms. A comprehensive view of your credit health fosters improved credit management and financial well-being.

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What are the three major credit reports?

The three major credit reports in the USA are generated by the three major credit reporting agencies (credit bureaus), TransUnion, Experian and Equifax. Each of these credit bureaus maintains an individual credit report for consumers. Information reported to and gathered by the reporting agencies is used to compile credit reports. Lenders and other institutions use these reports to assess your creditworthiness when you apply for credit, such as loans, credit cards, and mortgages.

TransUnion credit reports contain information about your credit accounts, payment history, credit inquiries and any relevant public records. Data is collected from various sources and compiled into credit reports that help lenders assess consumer creditworthiness. Consumers may also use them to review and manage their credit and financial health.
Experian credit reports include comprehensive data and information pertaining to your credit history. This includes details about your credit accounts, payment history, inquiries, and public records. Experian collects and maintains credit information from lenders and other sources to generate credit reports, which may be used by lenders to assess credit risk and individuals for credit management.
Equifax credit reports also contain information about your credit history, credit accounts, payment history, credit inquiries, and public records (if applicable). Lenders, creditors, and other authorized entities report your credit activity to Equifax and use the information to assess creditworthiness. Individuals may access the information to understand their credit status.

Are the credit reports from the three bureaus the same?

The three credit reports generated by the three major credit reporting agencies (Equifax, Experian, and TransUnion) are not the same. They contain similar types of information, but there can be differences between them. Here are some reasons why the three credit reports are not identical:

Data reporting. Lenders and creditors might not report to all three credit bureaus. Some lenders report to only one or two of the bureaus, which can lead to variations in the information included in each report.
Timing of reporting. The timing of when lenders report your credit activity can differ. For example, a credit card payment you make in a particular month might be reported to one bureau before it’s reported to another.
Errors or inaccuracies. Errors can occur in the reporting process. While credit bureaus strive for accuracy, there’s a possibility that a lender might report incorrect information to one bureau and not to others.
Public records and collections. If you have any public records, such as bankruptcies or tax liens, or if an account has been sent to collections, these events might not be reported to all three bureaus at the same time.
Scoring models. Each credit bureau uses its own scoring model to calculate credit scores. While the factors influencing your score are similar, the specific calculations might differ, leading to variations in credit scores across the bureaus.
Credit inquiries. Each credit bureau records inquiries made on your credit report. However, some inquiries might be reported to only one or two bureaus, leading to differences in the number of inquiries on each report.

Who uses the three credit reports?

While there is overlap in the types of users, there can be some differences in who uses each report based on regional preferences and business relationships.

Lenders and creditors. Banks, credit unions, and credit card companies use credit reports to evaluate the risk of lending money to individuals. They assess your credit history and credit scores to determine the terms of credit offers, including interest rates and credit limits. Some lenders might have preferred relationships with specific credit bureaus and primarily use reports from those bureaus for their lending decisions.
Landlords. Landlords use credit reports to screen potential tenants and assess their financial reliability. A credit report can provide insights into an applicant’s payment history and financial responsibility.
Employers. In some cases, employers may request permission to access your credit report as part of the hiring process, especially for positions that involve financial responsibility or access to sensitive financial information.
Insurance companies. Insurance providers, particularly for auto and home insurance, may use credit reports to help determine insurance premiums. Research suggests a correlation between credit history and the likelihood of filing insurance claims.
Utility Companies. Some utility companies, including providers of electricity, gas and telecommunications services, might check your credit report when setting up new accounts. A positive credit history could result in better terms or avoid certain security deposits.
Government agencies. Government agencies dealing with tax collection or certain licensing processes, might use credit reports to assess an individual’s financial standing.
Financial institutions. Beyond lending, financial institutions like credit unions and banks may use credit reports to determine eligibility for financial products or services.
Individuals. Individuals, including yourself, can access your own credit reports to monitor your credit health, check for inaccuracies, and ensure that your financial information is up to date.

Specific users accessing credit reports from each bureau vary based on factors such as local laws, business relationships, and industry regulations.

Is it useful to review information from all 3 bureaus?

Reviewing your credit information from all three bureaus is an important step in credit and financial health management. If you are making a major financial decision, such as applying for a mortgage or loan, it is important that your credit information is accurate and up to date.

Assessing information and data from each of the three major credit bureaus (TransUnion, Experian and Equifax) involves a systematic approach to ensure accuracy, consistency, and a comprehensive understanding of your credit situation. Typically, there are several steps to reviewing all your credit information and data.

Obtain your credit reports from all three bureaus. You are entitled to one free copy of each report annually from AnnualCreditReport.com. Review the reports individually, focusing on the details of your accounts, payment history, inquiries, and any other relevant information.
Compare and cross-reference information across the three reports. Look for any inconsistencies or discrepancies in account balances, payment histories, and other account details. Check that all your active and closed accounts are accurately represented on all reports.
Verify your personal information, such as your name, address, and Social Security number, is consistent and correct across all reports. Discrepancies could indicate potential errors or fraud.
Check for inaccuracies, such as accounts you did not open, missed payments that you believe you made on time, or incorrect account statuses. If you find any discrepancies, follow the dispute process to correct the information.
Review credit utilization. Examine your credit card balances and credit limits for each account on all reports. Calculate your credit utilization ratio (credit card balances divided by credit limits) for each bureau. Ensure the ratios are consistent and within a healthy range.
Review any public records, such as bankruptcies, tax liens, or civil judgments, on each report. Check if any negative items, such as late payments or delinquencies, are accurately reported.
Compare credit scores from each bureau to identify any significant differences. Slight variations are normal due to different scoring models.
Identify improvement opportunities. Prioritize actions that can positively impact all three bureaus, such as paying bills on time and reducing credit card balances.
Regularly monitor your credit reports and scores from all three bureaus. Consider using free or paid credit monitoring services to receive alerts about changes to your credit.
Take steps to correct inaccuracies, discrepancies and negative information.
Focus on maintaining consistent financial habits. Timely payments, responsible credit utilization, and avoiding excessive new credit applications contribute to healthy credit across all bureaus.

By conducting regular reviews and addressing any discrepancies promptly helps ensure that your credit information is accurate and reflects your true financial situation.

Is it easy to cross-reference data in the 3 credit reports?

The process of cross-referencing information from each credit bureau can be cumbersome and time-consuming. Each credit bureau has its own format for reporting credit information, so it can be difficult to compare the information from different bureaus. Additionally, each credit bureau has its own rules for how long they keep certain types of information, so it is possible that there will be gaps in the information that you receive. Here are some of the challenges of cross-referencing credit reports:

Different reporting formats. Each credit bureau has its own report format for credit information. This can make it difficult to compare the information from different bureaus.
Incomplete information. Individual credit bureaus access only a portion of your credit history. This means that there may be gaps in the information that you receive.
Errors. Credit reports can contain errors, which may be propagated with all three bureaus or not. This can make it difficult to track your credit history accurately.

How does Sesame Ring simplify 3-bureau report analysis?

Sesame Ring launched in August 2023 and is a new and innovative way for consumers to access and manage all their credit information. The free version includes the Sesame Grade based on credit score, data and information from TransUnion along with a personalized action plan, intelligent alerts and AI-driven customer support.

The paid Premium plan incorporates credit information from Experian and Equifax and a Sesame Grade that reflects overall credit health based on credit report data and information from all three credit bureaus.

Sesame Ring makes cross-referencing and comparing data between credit bureaus easy and intuitive. Consumers can expand each segment of the Sesame Ring to access more detail and suggested actions.

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What does the Sesame Grade mean?

The Sesame Grade is an overall assessment of your credit and financial health taking into account available credit and financial data. It is a single grade that summarizes the five credit factors (payment history, credit utilization, length of credit history, credit mix and new credit applications) for TransUnion or all three credit bureaus, depending on which version of the app is used.

In a nutshell

By combining data from TransUnion, Experian and Equifax, the Premium app provides a holistic view of credit health for consumers. This full picture empowers consumers to detect discrepancies and inaccuracies promptly and provides intelligent alerts and action items. The simple and intuitive presentation enables easy comprehension of financial standing and aids credit and financial decisions. An assessment of credit information from different sources gives consumers the confidence to manage and improve their credit. The Sesame Ring is a useful strategic tool for maintaining financial well-being and navigating credit-driven endeavors.

A comprehensive 3-bureau credit report offers clarity and confidence. It unifies data, aiding accuracy and informed decisions. The unique perspective provided by the Sesame Grade and Sesame Ring empowers users to understand their credit situation and financial status and provides the key to unlocking better credit management and opportunities.

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What gets reported to the credit bureaus

Dinesh S — Wed, 14 Aug 2024 12:01:28 +0000

What gets reported to the credit bureaus?

Your credit report is a record of your credit history. Information reported to the credit bureaus includes information about your personal identity, credit accounts, payment history, and any public records that may affect your credit.

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Examples of what gets reported to the credit bureaus

Your credit report reflects your personal history with debt and other financial transactions. Each of the three credit bureaus captures different data points and reports it in its own way. The information is commonly broken into several categories including personal identifying information, credit insights, public records and inquiries from groups seeking to review your credit history:

Personal identifying information. This includes your name, address, Social Security number, birth date, and other identifying information. This information is used to identify you and to match your credit report to your other financial accounts.
Credit accounts. A list of all of your credit accounts, such as credit cards, loans, and mortgages. The credit bureaus track the type of account, the creditor, the account number, the balance, and the payment history.
Payment history. This is the most important information that is reported to the credit bureaus. It shows how you have made your payments on your credit accounts over time. A good payment history helps you to build a good credit score.
Public records. This includes any public records that may affect your credit, such as bankruptcies, foreclosures, or tax liens. These records are typically reported for 7-10 years.
Hard credit inquiries. This includes any recent requests for your credit report. Lenders typically pull your credit report when they are considering you for a loan or credit card. Hard inquiries can have a small negative impact on your credit score and remain on your credit report for up to two years.
Soft credit inquiries. This includes any inquiries that have been made into your credit report. This information is not used to calculate your credit score, but it can be helpful to see who has been accessing your credit report.
Debt collections. If you have a debt that has been sent to collections, this information will be reported to the credit bureaus.
Foreclosures. If your home has been foreclosed on, this information is reported to the credit bureaus.
Judgments. If you have been sued and a judgment has been entered against you, this information is reported to the credit bureaus.
Bankruptcies. If you have filed for bankruptcy, this information is reported to the credit bureaus.

Not all of this information is reported to all three credit bureaus. Some lenders and creditors only report to one or two of the credit bureaus, and some lenders and creditors do not report at all. This is why it is important to check your credit report from all three credit bureaus to make sure that the information is accurate. If you find any errors on your credit report, you can dispute them with the credit bureaus. The credit bureaus investigate the dispute and should take appropriate action to correct mistakes.

How do the credit bureaus get my personal information?

Credit bureaus actively collect information on consumers from various sources. While much of the information reported to credit bureaus comes from creditors and lenders, credit bureaus also collect data from public records, such as bankruptcies, tax liens, and court judgments. Additionally, credit bureaus gather data from collection agencies and other third-party sources.

Credit bureaus maintain databases with comprehensive credit information on consumers, including their payment history, credit limits, outstanding balances, and public records. They compile this data to create credit reports, which are used by lenders, landlords, employers, and others to assess an individual’s creditworthiness.

It’s important to note that credit bureaus have specific guidelines and regulations they follow regarding the collection and reporting of consumer information. They are required to ensure the accuracy and integrity of the data they collect and to provide consumers with the opportunity to dispute any inaccuracies in their credit reports.

How can I be sure information reported to the credit bureaus is accurate?

Ensuring the accuracy of the information reported to credit bureaus is crucial for maintaining a healthy credit profile. Here are some steps you can take to verify the accuracy of the information on your credit reports:

Obtain your credit reports. Request a free copy of your credit reports from the three major credit bureaus, TransUnion, Experian and Equifax or via annualcreditreport.com
Review your reports thoroughly. Carefully examine each section of your credit reports, including personal information, account history, public records, and inquiries. Pay close attention to any discrepancies or errors.
Verify personal information. Check that your name, address, Social Security number, and other identifying details are correct. Errors in personal information can lead to mix-ups in credit reporting.
Verify account information. Review the accounts listed on your credit reports, including credit cards, loans, and other lines of credit. Ensure that the accounts are accurate and belong to you. Look for any unauthorized or fraudulent accounts.
Check payment history. Review the payment history of each account. Verify that the reported payment dates, amounts, and status (such as “current” or “late”) are accurate. Incorrect payment history can significantly impact your credit score.
Look for errors or discrepancies. Pay attention to any discrepancies between your records and the information on your credit reports. This includes incorrect balances, accounts that you have closed but are still listed as open, or any missing positive payment history.
Report errors to the credit bureaus. If you identify any errors or inaccuracies on your credit reports, you should dispute them with the credit bureaus. Each credit bureau has a dispute process in place. You can typically initiate a dispute online, by mail, or by phone. Provide supporting documentation to substantiate your claim.
Follow up on the dispute. After filing a dispute, credit bureaus have 30 to 45 days to investigate and respond. They will contact the data furnishers (creditors, lenders, etc.) to verify the accuracy of the information. If the information is found to be inaccurate, the credit bureau must update your credit report accordingly.
Monitor your credit regularly. It’s a good practice to monitor your credit regularly to catch any potential errors or signs of identity theft. You can use credit monitoring services or take advantage of free credit monitoring offered by various financial institutions and credit card companies.

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Who can access information reported to the credit bureaus?

Several entities have the ability to access your credit report, although the level of information they can view may vary. Here are some examples of who can access your credit report:

Lenders and creditors. When you apply for a loan, credit card, mortgage, or any other form of credit, the lender or creditor typically pulls your credit report to assess your creditworthiness and determine the terms of the credit they may offer you.
Landlords. Landlords may request access to your credit report as part of the rental application process. They use this information to evaluate your financial responsibility and determine your suitability as a tenant.
Employers. In certain situations, employers may request access to your credit report, especially for positions that involve financial responsibilities or require a high level of trust. However, employers typically need your consent and must follow legal guidelines when obtaining credit reports for employment purposes.
Insurance companies. Insurance companies, particularly those offering policies related to auto, homeowners, or life insurance, may access your credit report to assess the risk of insuring you. This practice is known as insurance underwriting.
Government agencies. Government agencies may access your credit report for various purposes, such as determining eligibility for government benefits, verifying your financial status for security clearances, or investigating cases of fraud.
Collection agencies. If you have unpaid debts that have been transferred to a collection agency, they may access your credit report to evaluate your financial situation and pursue collections.
Credit card companies and financial institutions. Credit card companies and financial institutions may access your credit report when reviewing existing accounts or considering you for new products or services.
Credit monitoring service. If you enroll in a credit monitoring service, they will have access to your credit report to monitor changes, provide alerts, and assist in identifying potential fraudulent activity.

Entities accessing your credit report must have a legitimate reason and comply with legal requirements, such as the Fair Credit Reporting Act (FCRA) in the United States. You have the right to know who has accessed your credit report and why.

In a nutshell

Ensuring the accuracy of your credit reports is crucial for maintaining a healthy credit profile. Regularly reviewing your reports, verifying personal and account information, and promptly disputing any errors are key steps to take. By actively monitoring your credit and taking necessary actions, you can have more control over your financial well-being.

Maintaining accurate credit information empowers individuals to make informed financial decisions. By understanding what gets reported to credit bureaus, verifying information, and addressing inaccuracies, you can work towards a strong credit foundation and greater financial opportunities. Stay proactive in managing your credit to secure a brighter financial future.

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How to read a credit report

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Value of credit reports

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How to read a credit report

Dinesh S — Wed, 14 Aug 2024 11:39:09 +0000

How to read a credit report

Whether you are planning to apply for new credit, want to know how creditworthy you are, or wondering if you are the victim of identity theft, it’s smart to check your credit reports. You can access your three credit reports online and experts recommend checking your credit reports regularly and knowing what to look for.

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What is in your credit report?

Your credit report offers a detailed record of your credit history and includes information about your borrowing and repayment habits. The report usually covers at least four categories: personal identifying information, credit accounts, credit inquiries, and public records and collections.

The personal identifying information section typically includes items like your name, address, date of birth, Social Security Number, and employment details that are used to identify you.

The credit accounts section covers any accounts you have opened across your credit history, including credit cards, loans, and lines of credit, as well as details like the date you opened each account, payment history, account balances, and your loan or credit limit.

The credit inquiry section includes a list of anyone who accessed the credit report over the last two years. This section indicates “hard” inquiries that resulted when you requested a new credit and “soft” inquiries when you got preapproved for a credit offer or when lenders requested your credit report.

The public records/collections section provides info about your public records on file with federal, state, county, or local courts, including bankruptcy actions. This section may also include details about overdue debt sent to collections.

“Credit reports are used by lenders, landlords, and other financial institutions to assess your creditworthiness and risk level. Its purpose is to provide a snapshot of your financial history and help parties like these determine if you are a good candidate for credit,” explains Dennis Shirshikov, a strategist for Awning.com and a professor of economics and finance at City University of New York.

According to the Federal Reserve, insurance companies also look to credit reports to determine if you are worthy of a policy and to set the rates you pay; employers can use your credit report, if you permit them, to determine if they want to hire you; and utility and telephone companies can glean information in your credit report to choose whether or not to offer you services.

Jeanne Kelly, credit coach and founder of The Kelly Group Coaching, says a credit report “is like the grown-up version of our school report card with finances.”

Who issues credit reports?

You have three different credit reports. These are issued by the three major credit bureaus: TransUnion, Experian and Equifax.

The credit bureaus collect the information they put in your credit report from your creditors, for example, your bank, credit card company, or mortgage lender. They also gather details from public records like court or property records. Each credit bureau organizes this information into your credit report and offers this report to companies or individuals who request it and can legally access it.

Note that the information in the report from one credit bureau may not identically match the information in the report from another credit bureau. However, all three credit reports are similar, typically.

How to access your credit reports

You are entitled to access your three credit reports for no charge at least once annually by visiting Annualcreditreport.com. Equifax, TransUnion, and Experian created this website to allow you simple and easy access to each of their credit reports. You can also phone (877) 322-8228 and request to have your three credit reports mailed to you.

Note that you must supply particular information to access your reports, such as your name, address, Social Security number, and date of birth. Also, you can request to see one, two, or all three of your reports simultaneously. But, because each credit report can differ slightly in terms of the information reported, it’s best to review and compare all three reports at the same time.

How often to review your credit reports

The pros agree that you should check your three free credit reports at least once a year, but it may make sense to review your credit reports more often.

“You should check your credit reports every 4 to 6 months,” recommends financial expert Lyle Solomon, principal attorney at Oak View Law Group. “Frequently checking your credit reports will help you stay on top of your credit information, minimizing the chances of the credit bureaus reporting inaccurate information and possibly harming your credit. You can also avoid the major consequences of identity theft, as it can go unnoticed for months or even years if you don’t regularly check your credit report.”

Shirshikov adds that it’s wise to evaluate your credit reports before planning to apply for any new credit, “as any errors or mistakes on your credit reports could affect your credit score and your ability to get approved for that new credit. If you suspect that there might be errors on your credit reports, you might want to review them more frequently.”

Kelly advises reviewing your three reports at least three months before applying for a new loan, account, or another form of credit.

What to look for in your credit reports

Once you have your credit reports available, take the time to review each carefully. It may be best to print each out so you can mark up or note any problems you spot or questions you have.

Solomon recommends thoroughly checking each of the following:

Ensure your personal information – including your name, address, Social Security number, and phone number – is correct. Inaccurate personal information can get a credit application denied, as lenders will not be able to verify your identity.
Review each credit account and credit history listed carefully to ensure each account number, name, balance amount, payment history, payment due date, and payment status are accurate. “Potential errors to watch for include closed accounts incorrectly reported as open as well as open accounts reported as closed, accounts in good standing reported as delinquent, payments reported as late when you paid them on time, and incorrect dates,” says Solomon.
Scrutinize the credit inquiries section. This section lists companies that have requested a copy of your credit report. “Credit inquiries can affect your credit score, so knowing which companies can access your credit report and why is essential. If you don’t recognize one or more inquiries, it could indicate identity theft,” cautions Solomon. “Check the dates of all the listed inquiries, as they should be removed after two years.”

Red flags to watch for

Warning signs to keep an eye out for include accounts you don’t recognize, late payments, and high balances relative to your credit limits, Shirshikov points out.

“Look for any accounts that are in collections or have been charged off that you suspect are in error, too,” suggests Min Hwan Ahn, an attorney in New York.

What to do if you spot any problems or errors

If you locate any errors, inaccuracies, or other problems in any of your credit reports, you should contact the respective credit reporting agency that issued that report and dispute the error as soon as possible.

Before attempting to dispute something in a credit report, collect any documents or evidence you have that back up your dispute. For instance, if your credit report indicates incorrectly that you are late on a credit card payment, prepare to furnish receipts, copies of bills, cleared checks, or money order stubs that prove you paid on time.

Once ready, you can contact the credit reporting agency online, by phone, or by mail. Indicate the error and what you desire changed in your credit report. State the facts, explain why you are disputing this matter, and ask that the item be changed or removed. Provide copies of your supporting documentation (not the originals).

Here’s a table indicating ways to contact each credit bureau and dispute your credit report provided by the Consumer Financial Protection Bureau:

Dispute method	Equifax	Experian	TransUnion
Online	https://www.equifax.com/personal/credit-report-services/credit-dispute/	http://experian.com/disputes	http://transunion.com/credit-freeze/place-credit-freeze
Mail	Mail letter explaining mistakes and completed dispute form	Mail letter explaining mistakes	Mail letter explaining mistakes and completed dispute form
Mail	https://www.consumer.equifax.ca/personal/dispute-credit-report-form/	No dispute form needed	Dispute form: https://www.transunion.com/docs/rev/personal/InvestigationRequest.pdf
	http://equifax.com/cp/MailInDislcosureRequest.pdf		https://www.transunion.com/docs/rev/personal/InvestigationRequest.pdf
	Mail to: Equifax Information Services LLC P.O. Box 740256 Atlanta, GA 30348	Mail to: Experian P.O. Box 4500 Allen, TX 75013	Mail to: TransUnion Consumer Solutions P.O. Box 2000 Chester, PA 19016
Phone	(800) 864-2978	(888) 397-3742	(800) 916-8800

If you plan to snail mail any dispute, opt for certified mail with a return receipt requested so that the post office can send a postcard indicating when your dispute letter was delivered.

“The credit reporting agency is required to investigate the erroneous information you provide within 30 days of receiving it unless they determined that the dispute is frivolous,” continues Solomon. “If the credit reporting agency determines that the disputed information is accurate, they must provide you with a written explanation of their decision. If you disagree with their results, you can send the credit reporting agency a letter with your explanation. You can also contact the Federal Trade Commission or your state’s attorney general’s office for assistance if you are unsatisfied with the results.”

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The risks of not reviewing or correcting your credit reports

The consequences of not checking your credit reports or doing nothing about errors within them are significant.

“Suppose you don’t check your credit report every few months. In that case, any wrong information there could continue to hurt your credit score and your ability to get credit or loans with favorable terms and conditions – without you even knowing why,” says Solomon.

Furthermore, “you could potentially miss out on credit opportunities or end up paying higher interest rates,” Ahn adds.

Also, you could be the victim of identity that may remain undetected, harming your creditworthiness over time.

In a nutshell

Reading a credit report is essential for financial well-being. Identify patterns, check for errors, and take proactive steps to improve credit. Timely payments build a positive credit history, leading to better opportunities.

Understanding your credit report is crucial. Regularly monitor it, rectify errors, and practice responsible credit behavior. Empower yourself with financial knowledge to unlock a prosperous future.

“By taking care of your credit, you can improve your credit score and make it easier to get approved for credit when you need it,” Shirshikov suggests.

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What do credit repair companies do?

Dinesh S — Wed, 14 Aug 2024 11:27:54 +0000

What do credit repair companies do?

A legal credit repair organization in the USA is a business that operates within the regulatory framework set forth by the Credit Repair Organizations Act (CROA) and other applicable laws. It offers services to help consumers improve their credit profiles by disputing inaccuracies, negotiating with creditors, and providing advice.

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Is Credit Sesame a credit repair company?

Credit Sesame is a financial technology company that provides free and premium credit management services, including credit score, credit monitoring, credit report data and information, and personalized financial recommendations. Credit Sesame is not a credit repair organization as defined above. It does not directly engage in credit repair activities or negotiate with creditors on behalf of consumers. Rather, it provides smart tools and services that can enable customers to manage their own credit.

What is credit repair?

In the United States, the legal definition of “credit repair” is provided under the Credit Repair Organizations Act (CROA). According to the CROA, credit repair refers to any service or action, whether performed through electronic or written means, that is intended to improve a consumer’s creditworthiness, remove unfair information, credit standing, or credit profile. It encompasses activities such as reviewing credit reports, disputing inaccurate information, and providing guidance or assistance on credit-related matters. Credit repair organizations operating in the USA must comply with the regulations outlined in the CROA.

What is unfair credit information?

The Fair Credit Reporting Act (FCRA) requires credit bureaus to remove unfair, inaccurate or unprovable information from your credit reports if you call it to their attention.

Does “unfair” mean it is not true? Not exactly. It means the entry is true, but the way it is reported may be excessively and unfairly damaging. For example, a single bad debt can pass through many hands; the original creditor, a collection agency and perhaps multiple debt buyers. If every debt buyer reports the same account, it can impact your credit score every time. You can have the excess entries deleted.

“Unverifiable” refers to items that cannot be proven. If a collection agency or debt buyer can’t document the original debt that you supposedly still owe, you can force the credit bureaus to remove it.

Credit Sesame vs. credit repair companies

The significant difference between a credit repair organization and Credit Sesame lies in the scope of services and level of involvement.

Credit Sesame is a financial technology company that primarily offers credit monitoring and financial management tools. It provides consumers with access to their credit scores, credit reports, and personalized recommendations for improving their financial situation. Credit Sesame does not directly engage in credit repair activities or negotiate with creditors on behalf of consumers. Instead, it empowers individuals with information and insights to make informed decisions about their credit and finances. The responsibility for taking action, such as disputing inaccuracies, generally rests with the consumer.

Credit repair organizations typically work actively on behalf of consumers to address inaccuracies, errors, and negative items on their credit reports. This involves communicating with credit bureaus, creditors, and collection agencies, initiating disputes, and negotiating with relevant parties to resolve credit-related issues. Credit repair organizations aim to improve clients’ credit profiles by taking specific actions and advocating on their behalf.

It’s important to note that the level of involvement and services provided by credit repair organizations can vary. Some may offer more comprehensive assistance, while others may focus on specific aspects of credit repair. Consumers should carefully research and evaluate the services, reputation, and compliance of any credit repair organization they consider working with.

There may be value for consumers in working with both Credit Sesame and a reputable credit repair organization. Although, Credit Sesame makes it easy for you to understand and take actions to actively manage your credit scores.

What credit repair companies can't do

Credit repair companies cannot promise to remove accurate information that does not fall under unverifiable or unfair exceptions. The CROA says that companies cannot request or receive payment until they have completed the credit repair services promised.

Can you repair your own credit?

Individuals can repair or improve their own credit without help from a credit repair organization. Here’s what you might need to do to repair your own credit:

Request your credit reports from Equifax, Experian and TransUnion for free at annualcreditreport.com, the only credit reporting site maintained by the federal government.
Work your way through each report and flag damaging entries. Determine which are accurate (but possibly reversible), inaccurate, unfair or unverifiable.
Collect the information or documents needed to prove your case. That might be canceled checks or bank statements proving you made a payment, a statement showing a closed or paid account, or a validation notice from a collection agency.
Contact the bureau(s) and complete their online forms disputing the information. Experian, Equifax and TransUnion make it easy to file your dispute on their websites and upload documents. Or you can call or do it by mail.
Give the credit bureaus 30 days to investigate your claim.
Recheck your credit reports to make sure the disputed items have not reappeared.
Monitor your credit reports to ensure the errors don’t reappear.

Free and paid Credit Sesame membership helps source and organize much of this information, but you stay in control of when and how you take actions that can have positive effects on your credit.

How much does professional credit repair cost?

The cost of credit repair services operating legally under the CROA varies depending on several factors, including the specific services offered, the complexity of the credit issues, and the credit repair company you choose to work with. Credit repair organizations may charge different fee structures, such as a monthly fee, a one-time setup fee, or fees based on specific services provided.

The cost of credit repair can range from around $50 to several hundred dollars per month, depending on the extent of the services provided and the complexity of the credit issues being addressed. Some individuals choose to pursue self-directed credit repair, which can be done at little to no cost, by reviewing their credit reports, disputing inaccuracies themselves, and adopting positive credit practices.

If you are considering credit repair services, it is advisable to research and compare the costs and services of different companies, ensuring they are reputable and transparent in their pricing structure.

Credit repair scams

Not all credit repair services are legitimate. Some indulge in illegal practices that might work in the short term but could get you into big trouble.

One popular scammy tactic is the “new credit identity.” They promise to make your questionable past disappear by helping you apply for a new social security number. However, there are only a few legal reasons for doing this, such as identity theft. Filing a police report for nonexistent identity theft is illegal. Any strategy deployed for the purpose of misleading creditors is against the law.

Another shady trick is spamming credit bureaus with disputes for every derogatory entry because these have to be deleted after 30 days if they cannot be proven. However, they reappear if they are legit, and the bureaus are allowed to ignore your disputes if they are frivolous.

Disreputable credit repair companies may also recommend that you purchase “tradelines” or “authorized user accounts.” There are services out there that rent credit information from consumers with good credit. They add you as an authorized user to their accounts, and then their payment history populates your credit report. A line of on-time payments can improve your score. Many parents do this for their adult children to help them establish credit, but this is not the same. Apart from the cost, Experian warns that paying to piggyback on a stranger’s credit card and misrepresenting your true creditworthiness to a lender is bank fraud, and you could pay a steep price, especially if you later default on the loan.

Other scammy companies simply take your money upfront and do very little or nothing to help repair your credit. If a firm demands upfront payment, it is probably a scam.

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The value of legitimate credit repair professionals

Legitimate credit repair can save you time and aggravation and can sometimes help you clear accurate derogatory entries using debt validation and goodwill letters. They may also help you reestablish good credit the right way.

Firms operating legally will tell you you have the right to review your contract before signing. They must also disclose that you can repair your credit yourself. Dodgy companies might fudge important numbers like the cost of their services.

Look for reputable outfits displaying good ratings with the Better Business Bureau, TrustPilot and other review sites. Make sure you understand what services are provided, any guarantees and the cost.

In a nutshell

Credit repair organizations offer services aimed at improving individuals' credit profiles. They work on behalf of consumers to address inaccuracies, negotiate with creditors, and provide guidance. While some consumers may find value in the assistance provided, choosing reputable organizations is essential, being aware of potential costs, and understanding that self-directed credit repair is also a viable option.

Whether opting for professional credit repair services or pursuing self-help methods, the ultimate goal remains the same: to improve your credit standing. It's crucial to approach credit repair cautiously, conduct thorough research, and consider your particular circumstances. By taking informed steps, you can work towards rebuilding your credit and achieving better financial well-being.

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Is there really good debt and bad debt?

Dinesh S — Wed, 14 Aug 2024 11:13:22 +0000

Is there really “good debt” and “bad debt”

Becoming a great money manager requires learning about debt and managing payments responsibly. It takes time to learn the ins and outs of debts, payment plans, and effects on credit. A common question is whether there is such a thing as good debt and bad debt. Borrowers understandably want good debt that can build their credit while avoiding bad debt that might hurt their ability to get credit or make purchases. In most cases, debt is neither good nor bad. Instead, it’s a tool borrowers use to manage their financial needs.

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Understanding Types of Debt

Debt is money owed to a lender, typically incurred through transactions with banks, car dealers, or credit card companies. Terms like “good debt” and “bad debt” are commonly heard but often lead to unnecessary confusion. In reality, most debt is a financial tool and cannot be neatly categorized as inherently good or bad. Instead, the financial habits associated with debt management determine its impact on credit health.

Good Debt

This category comprises debts that contribute to maintaining and improving credit standing. Examples include credit card balances, car loans, student loans, and mortgages. Effective debt management involves making timely payments, avoiding excessive credit inquiries, and maintaining a healthy balance-to-limit ratio on credit cards. When borrowers adhere to these practices, they demonstrate responsible debt management and strengthen their credit profile.

Bad Debt

The concept of bad debt is nuanced and context-dependent. Sometimes, it refers to debts that become unmanageable due to high interest rates or unsustainable repayment terms. As the balance accumulates rapidly, borrowers may be unable to keep up with payments, eventually leading to debt collection efforts or even bankruptcy. Alternatively, bad debt may also denote poor money management habits exhibited by borrowers. For instance, falling behind on car loan payments or neglecting credit card balances can negatively affect credit reports and scores, resulting in long-term credit challenges that take considerable time to rectify.

The distinction between good and bad debt is not about the debt itself but rather the borrower’s financial behaviors and habits. Individuals can effectively leverage debt to build and maintain a healthy credit profile by cultivating responsible money management practices and prioritizing timely payments.

How to secure and maintain good debt

Understand the parts of a credit report

Understanding credit reports is important to determine whether debt is good or bad. Three credit reporting firms, Equifax, Experian, and TransUnion, put borrower data into these reports. A credit report shows the types of debt a borrower holds. It can also list other financial transactions, such as apartment or housing rentals. Common categories in a credit report include:

Types of debt on file (both active and paid off or closed accounts)
Payment history
Age of debt
Debt utilization
Newly opened accounts
Inquiries or requests to review the credit report
Any concerns or issues, such as delayed payments, bankruptcies, or debts sent to collections

People who manage these components well maintain good debt. They take out loans they can afford, have a mix of debt types, and pay the balances they owe. If such borrowers experience financial problems, they work to resolve them and rebuild their credit.

Know how a credit report translates into a credit score

Every credit reporting agency calculates credit scores slightly differently. Free tools such as the Credit Sesame app can collect this information in a single location for borrowers to review. Good debt management practices are often reflected in mid-to-high-range credit scores.

A credit score in the 200s to 400s means there’s plenty of opportunity to practice better money habits. For example, focusing on a bad debt that’s behind on payments, paying off the outstanding balance, and making timely payments going forward.

A credit score in the 500s to 600s might mean a person is improving with more growth to come. For example, adding a new debt type for a better credit mix or using a smaller portion of available credit for a better credit utilization ratio.

A credit score in the 700s to 800s generally suggests good debt management practices. There could be additional opportunities to improve, such as reviewing credit reports monthly, ensuring reports are error-free, and continuing to pay balances on time.

Evaluate credit mix

People with higher credit scores and good credit reports tend to hold two or more types of debt. This shows lenders the borrower can manage expenses and pay back lenders across debt types.

Consider opportunities to add good debt

Good debt isn’t just an existing account on a credit report. It can also be a new loan that adds greater diversity to a borrower’s credit mix. For example, if a person only has a credit card, they could add a student loan or a car loan. This new loan remains good debt as long as the borrower makes timely monthly payments and continues to cover their other expenses.

Monitor credit regularly

It’s important to know how to navigate and strengthen a credit report to maintain good debt. Occasionally, errors occur on credit reports. Keep good records of debts and other financial transactions, such as a list of past rentals. Compare this information to the details listed on credit reports. If an error appears, file a dispute by following the process each reporting agency outlines on its website.

How to identify and avoid bad debt

In some cases, debt damages a credit report and lowers a borrower’s score. Watching for warning signs can help borrowers manage their money well and fix problems.

Understand how a debt can become bad

In most cases, bad debt becomes bad because it needs better management. For example, this could include:

Holding a loan with a high or variable interest rate that becomes too large to pay
Falling behind on a payment
Having a debt that goes to collections after persistent missed payments
Declaring bankruptcy

Debt is a tool that can have harmful consequences if regular management and good credit practices aren’t applied.

Monitor credit regularly

A few practical steps can help avoid bad debt – or turn a bad debt into good debt. These might include:

Review the latest available credit report from the three reporting agencies. Identify any problem areas listed on those reports.
Determine the cause of any issues. This could include a missed payment, a series of late payments, or even a bankruptcy.
Decide to make changes that help fix the bad debt. For example, to remedy a missed payment, a borrower might pay their latest balance in full plus extra to cover the full cost of the missed payment. To address late payments, a borrower might contact the lender and work out a plan to pay a little extra each month until the difference is resolved. In the case of bankruptcy, a borrower might work with a trusted financial adviser to develop good money management habits for years. Eventually, the bankruptcy will come off the report, and good habits used in the meantime will build credit.

Adjust plans as needed to manage debt and improve credit

Money management decisions should adapt to the borrower’s circumstances. A new job might help a borrower make payments more quickly to resolve outstanding debts. Meanwhile, a job loss might mean some plans get put on hold. This ensures the borrower can cover essential expenses such as food, utilities, and housing.

It can take months and even years to address and fix bad debt. Don’t let an unexpected life event throw off a well-thought-out plan to improve credit. Review the plan regularly, assess the steps in progress, and make adjustments as needed.

What factors separate good debt from bad debt?

Good debt helps borrowers maintain and even build their credit reports. Over time, it can lift a credit score higher. The presence of good debt on a credit report shows lenders the borrower can make timely payments. It shows the borrower is a responsible money manager. Good debt reveals good money management habits.

Bad debt does the opposite. Remember, debt is a tool. In most cases, it’s neither good nor bad. Instead, bad debt reveals less-than-optimal habits, such as falling behind on payments, or defaulting on the debt.

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How does a borrower get rid of bad debt?

The first step to take is to understand the causes of bad debt. The best place to start is the borrower’s credit report. See what the credit reporting agencies list as problems or issues. Then, make a corresponding plan to begin addressing each. This could include getting caught up on payments, working on better money management after a bankruptcy, or reducing how much available credit gets used each month.

Meanwhile, ensure the basics of good credit – paying monthly balances, having multiple debt types, and only using a portion of available credit – get applied daily.

These steps can help borrowers address bad debt and turn debt into a tool with good outcomes.

What are the risks of having bad debt?

Bad debt can mean a person struggles to make payments. This could be an ongoing problem or a problem that took place in the past.

As a result, a lender might be unlikely to extend new credit. A banker might decline to make a personal loan. A private education loan business might not provide a student loan. A car dealer might not agree to a proposed vehicle purchase.

Other types of financial activities might be affected, too. For example, if a landlord sees bad debt on a credit report, they might not let the borrower rent from their apartment complex.

What are the benefits of having good debt?

Good debt reflects good money management habits. It reflects a person’s ability to spend within their means, successfully pay down several types of debt, and continue good money habits over months and years.

This could result in better interest rates on new debt and more favorable loan terms. It could make it more likely for the borrower to secure a rental unit or a mortgage for a house purchase.

In a nutshell

The idea of good debt and bad debt can be misleading because debt is a neutral tool. People use debt to fund various life activities including education, housing, and transportation. Borrowers should understand that there are good and bad debt management practices. Good habits keep borrowers current on payments, enable them to strengthen their credit report (and often their score) and achieve their financial goals. Bad habits can result in debts that stick around longer than expected, result in missed payments, and, in the most challenging cases, be a factor in declaring bankruptcy. Good habits can be learned and practiced by any borrower to create better financial security in the long term.

Good debt helps borrowers meet their financial goals and maintain strong credit. Regardless of what a credit report says today, borrowers can take steps to turn bad debt into good debt. This can lead to long-term benefits for borrowers, no matter their financial past.

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Good and bad debt

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How to get a credit report

Dinesh S — Wed, 14 Aug 2024 10:59:47 +0000

How to get a credit report

You can obtain a credit report from credit bureaus such as Equifax, Experian, and TransUnion. Visit their official websites or use authorized platforms like AnnualCreditReport.com to request a free copy of your credit report once a year. Some financial institutions and monitoring services, including Credit Sesame, also provide access to credit reports.

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Where to get a credit report

In addition to credit bureaus and AnnualCreditReport.com, consumers can obtain their credit reports from various sources. Some options include:

Credit Monitoring Services. Many credit monitoring services offer access to credit reports as part of their subscription. These services often provide regular credit monitoring, alerts for changes in credit information, and access to credit reports from one or more credit bureaus.
Financial Institutions. Some banks, credit unions, and credit card issuers provide their customers with free access to credit reports. Check with your financial institution to see if they offer this service.
Online Credit Report Providers. There are several online platforms that provide credit reports from one or more credit bureaus. These services may charge a fee for access to credit reports, and it’s important to ensure they are reputable and reliable before providing personal information.
Credit Counseling Agencies. Non-profit credit counseling agencies may offer credit report access as part of their financial counseling services. These agencies can provide guidance on credit management and help consumers understand their credit reports.
Credit Score Apps. Some mobile applications and online platforms provide free access to credit reports and scores. These apps may offer additional features like credit monitoring and personalized financial recommendations.

It’s important to note that while there are several sources to obtain credit reports, it’s advisable to choose trusted and reputable sources to ensure the security and accuracy of your credit information.

What is a credit report?

A credit report summarizes your current and past use of credit.

It shows how you are using credit now, including your credit accounts, how much you owe, and your payment history. It also highlights specific credit problems you may have had in the past.

A credit report does not give a complete picture of your financial situation. It focuses on your use of credit and does not deal with your income or expenses. The idea is to show how much history of using credit you have and whether that history has been positive or negative.

What are credit reporting bureaus?

Credit reporting bureaus are independent organizations that compile credit reports.

The three major credit reporting bureaus are Equifax, Experian, and TransUnion. They compile information about consumers based on reports from a variety of creditors. Those creditors may include banks, credit unions, credit card companies, and other lenders.

The credit reporting bureaus provide credit reports to organizations with a business interest in your credit history. Generally speaking, an organization needs your permission to get a copy of your detailed credit report. However, there are situations where credit bureaus may provide your credit report without your consent. Most often, these involve legal circumstances such as:

A court order
Grand jury subpoena
Application for a government-issued license or permit
A child support determination

Credit reporting policies vary from one company to another. For example, some creditors routinely report information to all three major credit bureaus, while others may only report to one or two. The information reported and how the credit bureaus process that information may vary.

This means that your credit report may differ from one credit bureau to another. The takeaway is that just because you have looked at a credit report from one credit bureau, you cannot safely assume that someone who checks your report from another bureau will see the same thing.

Credit score vs. credit report

A credit report is not the same as a credit score. They are somewhat related, so people often refer to them as if they were the same. However, they provide different information.

A credit score is a three-digit number that summarizes your overall creditworthiness. It is based on the information in your credit report but does not give any details about your credit record.

Your credit report is much more detailed, though it does not give an overall score or assessment of your creditworthiness. Credit scores vary because they may be calculated in different ways by different organizations and also based on the type of credit sought.

The additional detail in a credit report allows for a deeper understanding of your credit activity than a single number score. That detail also clarifies what has been reported about you that might help or hurt your credit score.

What's in a credit report?

The following are details you find in a credit report:

Personal information

Name
Address
Birth date
Social Security Number
Phone Number

Information about past and present credit accounts

Type of account
Name of creditor
Credit limit or loan amount
Current account balance
Payment history
Account opening and closing dates

Collection accounts

If you fail to pay a bill, the account may be sold to a collection agency
Collection accounts are listed separately on credit reports and have a very negative effect on credit scores
Collection accounts will stay on your credit report for seven years from the date the account first became permanently delinquent

Public records of financial actions

Liens against your property
Foreclosures
Bankruptcies
Civil suits and judgments against you
Government records on overdue child support payments

Inquiries

Companies that have requested your credit report
Insight into what types of credit you may have applied for recently

How are credit reports used?

Credit reports are checked when you apply for a loan, credit card, or line of credit. What many people do not realize is that there are several other ways businesses use credit reports to evaluate individuals:

Insurance companies sometimes use credit reports to rate applicants. This can affect whether you are approved for insurance and what you are charged for it.
Potential employers look at credit reports to assess a job candidate’s reliability and to identify potential distractions due to financial problems.
Landlords and property managers may use credit reports to assess how likely a potential tenant is to keep up with rental payments.
Communications and utility companies may consider credit reports when deciding whether someone can open an account with them.
Casinos and other gaming organizations extending customers’ credit may make decisions based on credit reports.

When someone requests credit information on you, the request may be what is known as either a soft pull or a hard pull:

A soft pull is a routine check of your credit. For example, when an existing creditor reviews your account, a financial firm does a preliminary evaluation before an application, or you request your credit report. These should not affect your credit score.
A hard pull is typically made in connection with an application for new credit. These affect your credit score because creditors want to know how much credit you may have applied for lately.

Why you should regularly check your credit report

As you can see, your credit report contains some very important information about you. That information may impact not only whether you can get credit but also whether you get hired for a job you want, where you can live, how much you pay for insurance, and your access to other types of services.

Because so much is at stake, it is a good idea to regularly check to see what your credit report says about you. In particular, you should consider checking your credit report:

When planning an important business decision. This includes any time you plan to apply for credit. You should also check your credit before applying for a new job, apartment, or insurance. Since your credit report may affect any of these things, you should review that report well before applying.
To see how you can improve your credit. It is often difficult to fix bad credit in a hurry. So, instead of waiting until you are about to apply for something important to do something about your credit, it is better to work on maintaining good credit at all times. Knowing what is in your credit report will inform you about what may hurt your credit and how you might improve it.
To watch out for fraud. Credit reports can give you warning signs of fraud. A sudden jump in an account balance or the appearance of a new account you did not apply for could alert you that someone is using credit in your name.

How to request a credit report

You can request a credit report to see what information it contains about you.

Under the federal Fair Credit Reporting Act (FCRA), you are entitled to receive one free credit report from each of the three major credit bureaus every 12 months. Since information compiled by each bureau may differ, it is a good idea to check reports from all three bureaus periodically.

You are also entitled to a free credit report when:

You receive notice that an adverse action, such as denial of an application, has been made against you due to information on your credit report. The FCRA requires that anyone who makes a negative decision about you based on your credit report must inform you of that fact and provide you with the name, address, and phone number of the agency that issued the report.
You believe your credit information is inaccurate due to fraud.
You are unemployed and intend to apply for a job within 60 days.
You receive public welfare assistance.

In addition to having access to a free credit report under the circumstances above, the three major credit bureaus put in place a temporary program that allowed consumers to check their credit reports as often as once a week to see if they have been adversely affected by the economic impact of the COVID pandemic.

You can request a credit report by contacting any of the three major credit bureaus directly or online at AnnualCreditReport.com. That is a website sponsored by the three credit bureaus to provide consumers with a single source for their credit report requests.

You can also request a credit report by calling (877) 322-8228 or by mailing a request to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

What to do if there are problems on your credit report

If you check your credit report and do not like what you see, you should take action to fix it.

Problems on your credit report may be due to inaccurate information or actual issues with how you have used credit. In either case, there are things you can do to address the problems and improve your credit score.

Inaccurate information

If you find inaccurate information on your credit report, you should promptly contact the credit bureau that produced the report. Provide them with the following information in writing:

Your name, street address, email address, and telephone number.
The report confirmation number, if available.
The credit account number for any account you believe has been reported inaccurately.
Details of what information you believe is incorrect – ideally, send a copy of the credit report with any incorrect information noted on the page.
Documentation such as receipts, account statements, etc. that show the information on the report is inaccurate. ALWAYS SEND COPIES – not originals.

Equifax, Experian, and TransUnion each have an online form for disputing information. If you contact them by regular mail instead, keep a copy of your correspondence and request a record of receipt when sending. Also, check for contact information on the copy of the credit report you receive for the correct contact details.

Bad marks on your credit record

Besides errors, you may find various legitimate things on your credit report that are hurting your credit score. From missed payments to high credit utilization to a lack of balance in the types of credit accounts you have, once you identify what is wrong, there are a variety of ways you can work to address those problems over time.

Credit Sesame offers a Credit Report Summary that can help you understand what is hurting your credit so you can take steps to fix those problems.

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Using credit monitoring to keep an eye on your credit record

Checking credit reports from all three credit bureaus is a good idea. However, credit problems can arise anytime, and it can be burdensome to constantly request credit reports.

Credit Sesame offers free credit monitoring that will alert you to significant changes in your credit report. Finding out about potential problems more quickly will help you fix them sooner – before they have a chance to cost you.

In a nutshell

Regularly checking your credit report is not just about monitoring your financial history; it's a proactive step toward safeguarding your financial well-being. By staying informed about your credit standing, you empower yourself to make better financial decisions and address issues promptly. View your credit report as a valuable tool in your financial toolkit, providing transparency and enabling you to take control of your creditworthiness.

In the realm of personal finance, knowledge is power. Your credit report serves as a mirror reflecting your financial behavior. Make it a habit to review this mirror regularly, ensuring its accuracy and identifying areas for improvement. A well-maintained credit report can open doors to favorable opportunities. Guard your financial reputation, and let your credit report demonstrate your responsible financial behavior.

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