Experts recommend you pull each of your three credit reports — from credit bureaus Experian, Equifax and TransUnion — every year. However, what they don’t tell you is what to do after you receive them. Learning how to read your credit reports will help you identify any inaccuracies.
Why should you pull your credit reports, and how do you do it?
Credit reports aren’t immune to inaccuracies. And because the information on your reports is used to calculate your credit score, errors could lower your score — and prevent you from obtaining credit or getting favorable credit terms.
You can get free credit report information two ways: Some personal finance websites, including NerdWallet, offer free credit report information on demand, and you’re entitled to a free report direct from the three credit bureaus at least once a year by accessing AnnualCreditReport.com.
What’s on your credit report, and what should you check?
Getting your credit report is easy, but understanding the data reported can be tricky. Below, you’ll see a summary of each of the basic sections, as well as an explanation of any terms that may not be straightforward. Each of the three reports is organized differently, so the sections may fall in a different order, but all of your reports have the same basic information.
Depending on the credit bureau, your report might have a summary, which is just a basic listing of what you can expect to see on your credit report. It will list the number of potentially negative items and the number of accounts in good standing. Note: Your credit score isn’t reported on your credit report, but several credit card issuers and personal finance websites now offer free scores.
Your personal information will include a record of your name, current and previous addresses, types of residences, year of birth, current and previous employers and current and previous telephone numbers.
If there are a few different spellings of your name, or one or more of your employers or telephone numbers is missing, it’s not a big deal. You won’t have to dispute this information. The important thing is that the report has your information, not someone else’s.
Accounts in Good Standing
The “accounts in good standing” section, also referred to as “open and closed accounts” or “satisfactory accounts” section, lists all your current accounts that haven’t gone to collections or been defaulted on. Ideally, each of your accounts will be in good standing.
This is the meat of your credit report, and you’ll likely see the following items for each of your credit accounts: the name and address of the creditor, the account number, the status of the account and the status details. These are typically the first items listed. The status of your account will say whether the account is open or closed, whether it has been transferred and whether you’ve had late payments.
The status details will tell you when the account is scheduled to be removed from your credit report. This only applies to closed or transferred accounts. You’ll notice the date it’s scheduled to be removed is 10 years after it was last reported.
Next on the “accounts in good standing” section is the date the account was opened, the date the account has been reported since, the date of the current status and the date the account was last reported on your credit report. This is followed by the type of account (credit card, student loan, etc.), the terms of the loan, the monthly payment and the responsible party for paying off the account. Responsibility will indicate whether you’re an individual or joint owner of the account, or simply an authorized user.
The balance and payment information comes next. Remember, this will include the amounts last reported to the credit bureau and may not reflect your balance as of today. For example, if you charge all your expenses to a credit card and pay it off every month, you may still see a balance because your card activity was reported mid-reporting period.
This information includes your credit limit or original amount of the installment loan, the highest balance on the account, the most recently reported balance and the most recently reported payment. This is followed by any comments (such as transfer information), your payment history and balance history.
When examining the “accounts in good standing” section, you’ll want to make sure each of your current accounts are listed and that your payment history shows all on-time payments—provided you’ve made all your payments in a timely manner. You’ll also want to make sure your account limits are correct, as this can affect your credit utilization ratio.
Potentially Negative Items
The negative information on your credit report will include negative accounts, collections and public records. Each of these will generally stay on your credit report for seven years, with the exception of Chapter 7 bankruptcies, which stay on your report for 10 years.
Negative accounts are ones that haven’t been paid as agreed. Collections include any accounts sold to a collection agency after the original creditor wasn’t able to collect. Public records include bankruptcies, liens and judgments, and are reported by federal, state and county courts. This section only includes financial public records, not arrests or any other non-financial records.
In this section, you’ll want to make sure any negative information is accurate. If there are incorrect accounts or collections, you’ll want to dispute them immediately to have them removed from your report.
Record of Requests
In the “record of requests” section, also referred to as “inquiries,” you’ll find both inquiries shared with others and inquiries shared only with you. Inquiries shared with others are hard inquiries, or those that you authorized a potential creditor to make. These can affect your FICO score for up to a year (and your VantageScore for three months) and stay on your credit report for two years.
Inquiries shared only with you are soft inquiries, which don’t affect your credit score. Examples of this would be requesting your own credit score or report. Both types of inquiries will include the name and address of the organization that inquired, as well as the date of request.
In this section, you’ll want to make sure all hard inquiries were authorized by you. You’ll likely see any inquiries for new credit or limit increases, as well as inquiries by your apartment management or utility companies.
What should you do if you need to dispute an item?
If there are any relevant inaccuracies on your report, dispute them. After you find an error, get documentation to back up your claim and dispute the error. If your dispute hasn’t been answered within 30 days, follow up and continue to monitor your reports.
Pull your credit reports every year to make sure they’re all correct. Inaccuracies may lower your credit score and keep you from obtaining credit when you need it. If you find any mistakes, dispute them immediately to keep your credit in good standing.
Updated Sept. 12, 2016.