The three nationwide credit bureaus — Equifax, TransUnion and Experian — collect information about your financial history and create credit reports. Lenders, insurers and other businesses use these reports to evaluate your applications for credit, insurance and housing.
You have the right to get a free copy of your report once each year. To request yours, visit a website like Experian’s. You’ll enter personal information such as your name and Social Security number, then answer questions meant to verify your identity. Some financial advisors recommend staggering your requests throughout the year.
The exact information contained in a credit report varies by bureau and by consumer, but most include the following.
Accounts and balances
Credit reports detail the number and type of accounts in a consumer’s name, along with their balances. The accounts section also identifies whether the account is open, closed or delinquent and may note how long the account has been in that status. Some reports list the amount owed on each account, as well as the credit limit and the total debt you’ve used up, known as your credit utilization ratio. In addition, a credit report typically lists public records such as liens, judgments and bankruptcies.
A credit report will also indicate whether a person has been approved or denied for loans, and the terms of any such loans. It will also identify if any loans were sent to collections, or if the borrower filed for bankruptcy. In the case of a bankruptcy, it will note whether the bankruptcy was Chapter 7 or Chapter 13, and how long the bankruptcy remains on your report.
Credit bureaus also look at the types of accounts you have. For example, some scoring formulas consider how many revolving (credit card) accounts you have versus the number of installment accounts, such as retail or finance company accounts. Also, some formulas look at how recently you’ve opened new credit. Opening too many new accounts in a short period of time can make you seem riskier to lenders.
In addition, most reporting agencies consider the length of your credit history. A longer credit history may help you build a good score because it indicates that you have established and reliable payment habits. Finally, some formulas will weigh the mix of credit types you have, which can help your score by showing that you’re able to manage different types of credit.
A credit report contains a wealth of information, and it’s not always easy to read. It’s important to verify that the information in your credit report is accurate, as errors can negatively affect your ability to qualify for loans and insurance. If you find an error on your report, contact the credit bureau to dispute it. The credit bureau is required to investigate and respond to your dispute within 30 days. If you’re unable to reach an agreement with the credit bureau, federal law allows you to file a complaint with your state attorney general.