Here’s How to Read Your Credit Report Like a Pro

how to read a credit report

As important as it is to know your credit score, it’s not enough if you want to be on top of your credit game.

In fact, if you want to improve your credit, then it’s time to get familiar with credit scores’ less popular counterpart – the credit report.

While a credit report may sound boring, it unlocks the mystery behind your score. With this simple report, you can learn just about everything you need to know to get your credit score where you want it to be. Here’s what you need to know about how to read a credit report and where to get one for free.

What is a credit report?

A credit report is a statement detailing your financial history as a borrower. If you want to see an example, check out this credit report template from Experian.  It includes things like:

  • Your personal information
  • Your accounts
  • Public records
  • Credit inquiries

Although a credit report includes your financial accounts, it does not include your credit score. Rather, your credit report details everything that inevitably affects your credit score.

Unfortunately, credit reports and credit scores have become so synonymous over time that many people forget they’re not the same. To keep it simple, remember that your credit report is a detailed description of your credit history, whereas your credit score is a numerical score of your credit history.

How to get a free credit report

There are a lot of websites that will try to mislead you and get you to buy your credit report. Don’t fall for them.

If you want to know how to get a free credit report, it’s very simple. Just go to AnnualCreditReport.com and get your report from each of the three main credit reporting agencies (CRAs):

  • Experian
  • TransUnion
  • Equifax

You’re entitled to one annual free copy from each.

That’s not the only time you’re entitled to a free credit report. If you’re a victim of identity theft, then you also get a free credit report. And if your information has been exposed in a data breach, you might be given free access to your credit report and even free credit monitoring.

Here’s how to read a credit report

It might seem redundant to read your credit report from all three CRAs, but it’s not. Creditors don’t always report information to all three, so it’s possible that each credit report will look different.

Besides that, errors can happen, and they might just occur on only one of the reports from the CRAs. This is just another reason you need to check with all three. As for how to read your credit report(s), follow the steps below.

1. Make sure your personal information is correct

This is one of the most important steps you can take. Make sure your name and any initials are spelled exactly correctly – and triple-check your Social Security number to make sure every digit is right. If any of this information is off, that can mean trouble for you.

Simple errors like a transposed digit in your Social Security number or a spelling error in your name could lead to someone else’s credit activity being reported on your file. Do not move down to the rest of your report until you know for sure that your personal information is correct.

2. Be sure every account listed is, in fact, yours

Also, make sure every account listed is yours as well; the names of some of the accounts might look different than you expect. However, you can double check the fine print on your financial statement to see if that name is aligned with your account.

For example, many retail store cards are owned by banks such as Comenity Bank, and that might be the name you see on your report instead of the store name. In fact, Comenity manages more than 125 retail store cards in the U.S. See myFICO for an up-to-date list of these retailers, including popular stores like Express and Pottery Barn.

But if you review your print or online statement for your card, you’ll see the other name in the fine print. Therefore you’ll be able to tell if that account is yours.

3. Make careful note of any accounts that have gone to collections

You’d be surprised what can show up on a credit report. Reviewing your credit report could alert you to the fact that your student loans are now with a different servicer or that unpaid library book fine has come back to bite you.

What’s more, reading your credit report can help you if you didn’t realize an old account has gone off to collections. Make sure you reconcile every single account on your report. And if any accounts have gone to collections, call the collections company immediately and work out a plan to pay off the debt.

4. Review details such as balances and payment history for accuracy

One of the most important factors in your credit score is payment history. And seeing your payment history on your credit report can open your eyes to how you’ve been doing on that end.

Besides that, check out things like your balances to make sure they’re accurate. They aren’t updated in real time like your statements might be, but make sure they’re not totally off.

5. Note the public records that might show up

Another thing that shows up is public records. That could include judgments against you, bankruptcies, and tax liens. Like everything else, make sure the public record is something you were responsible for.

And don’t be surprised if you see something from a few years ago. These records can stay on your credit report for seven years.

6. Dispute any information that’s incorrect

When you finish reviewing all three of your credit reports, dispute any errors. Just make sure the dispute lines up with the CRA showing the error.

For example, if you’re seeing an error on your Equifax report but your Experian and TransUnion reports are fine, then only dispute your report with Equifax.

Why you should care about your credit report

If it’s not clear already, your credit report provides crucial information when reviewing your overall finances. Anytime you need credit to accomplish a goal in life, just remember your credit report will affect you whether you realize it or not.

As much as things like your credit score seem out of your control, they’re really not. And the first step to regaining the control of your credit score and, thus, your credit opportunities, is to make sure your credit report is in order.

Once you do that, you can work on improving your credit score to be sure you always have access to credit when you need it.

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