When you apply for a credit card, mortgage or loan, the lender will most likely request access to your credit report. Your credit report provides important insights into your financial background and gives your lenders a look at your payment history and creditworthiness so they can determine your eligibility for credit.
A credit report is a detailed report that provides information on how you've used your credit in the past. This includes how much debt you have accumulated and whether you've paid your bills on time. You're eligible to receive a free credit report every 12 months from each credit bureau.
A credit bureau is an organization that collects and distributes credit information. In simpler terms, a credit bureau stores information about how a person has demonstrated their credit responsibility. The three major credit reporting agencies where you can find credit reporting are Experian™, Equifax ® and Transunion ® . The credit bureaus collect information regarding your loans and credit card accounts and generate credit reports based on this information. A credit bureau report's primary information includes the repayment history of past and existing loans and credit card accounts, which then helps determine your creditworthiness.
Checking your credit report doesn't have to be difficult. Follow these steps if you're wondering how to get a free credit report:
Your credit report will show personal information that identifies you like your date of birth, social security number, address, previous addresses, phone numbers, credit accounts and payment history. It may also include things like collections, repossessions, foreclosures and bankruptcy filings. Credit reports also have records of who has accessed your credit information. This can consist of the names of your creditors and marketers.
You may find two types of inquiries on your credit report and it's beneficial to know the difference between the two. The two types are hard inquiries and soft inquiries. Hard inquiries on your credit report indicate that a lender checked your credit report and typically involves a decision about loaning money or extending credit. Hard inquiries can show up on your credit report for up to two years and could potentially affect your credit score. Soft inquiries are simple reviews of your credit and don't affect your credit score or appear on the credit reports that potential lenders view.
Keep in mind, your credit report won't include information about your marital status, income, level of education or checking or savings account balance. It could, however, include your spouse's name if it's been reported by a creditor.
Your credit scores may vary, but that's because they can change frequently due to updates to your credit files at the three bureaus. Most creditors report to the credit bureaus monthly, but they report data at various times throughout the month and they may report to only one or two bureaus instead of all three. Your credit report can be continually evolving depending on how much new information is reported. The new data is reflected in your credit score once your report updates.
Credit reporting errors exist, so it's important to check your three credit reports from Experian, Equifax and Transunion to see any potential errors. Doing so may be the best way to discover whether you have credit reporting errors. The Fair Credit Reporting Act (FCRA) gives you the right to claim a free copy of your credit reports from each bureau every 12 months. But if you want to make sure your report stays accurate, checking once every 12 months may not be enough.
While the decision is up to you, checking your credit reports at least once a quarter can help ensure that there are no inaccuracies. If you're planning to apply for new credit to make a big purchase, it may be a good idea to check up on your credit report before you make this purchase.
