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How to Read a Credit Report

how to read a credit report

There is a lot of confusing information available about credit reports. You may be wondering how to read a credit report, or even how to get access to your credit report. We’re here to help you clear up the mystery and get a solid understanding of the information on your credit report so you can build the best credit possible.

Do I Have a Credit Report?

If you’ve ever opened a credit account, no matter whether it was a student loan, a credit card, or a car loan, you have a credit history and therefore, a credit report. When you want to apply for any type of credit, the bank or lender will take a look at your credit report to determine whether they want to lend you money. They base this decision on the information contained in your credit report, and often on your credit score. In some cases, employers may look at your report before offering you a job. Knowing how to read a credit report and how to understand the information on it is important for your financial well being.

Where Can I Get My Credit Report?

You have a few options when it comes to getting your credit reports. In the US, there are three national credit reporting agencies: TransUnion, Experian, and Equifax. Each company creates its own report about you based on your loan history, payment history, and public information such as a history of bankruptcy or judgments against you.

You’re allowed to get a free copy of your credit report from each agency once a year. The easiest way to get your report is to visit annualcreditreport.com and follow the steps to provide your information. You can either choose to receive all three reports at once or to visit every few months and review each report one at a time.

What’s In My Credit Report?

Getting a copy of your credit report is one thing, but do you know how to read a credit report? The first place to start is understanding what information your credit report contains. Although each report is slightly different based on the credit reporting company you are dealing with, all three reports will have the same basic information:

  • Personal information, such as past and current address, Social Security number and phone numbers.
  • Your credit history, including currently open accounts as well as some closed accounts. The reports will detail each type of account, the balances on the account and your payment history.
  • Information about your financial history in public records. The public records information only relates to your financial history. If you were arrested or sued for reasons unrelated to your finances, that won’t appear on your credit reports.
  • Credit inquiries, which are companies who looked at your credit history recently. 

Separating the Good from the Bad

Part of learning how to read a credit report is learning what’s good and what’s not so good on your credit report. Negative information to watch for on your report includes:

  • Late payments or a statement that you paid a debt 30, 60, or 90 days late.
  • A charged-off account -- means that you stopped paying your debt, and the creditor eventually stopped trying to collect from you.
  • Information about a bankruptcy, tax lien, or other financial judgment against you is also a negative on your report because these things can keep you from getting credit in the future.
  • High balances related to your credit limit. This can be an indicator that you are over-extended and a potential credit risk.

Wrong Information On Your Credit Report

Inaccurate or wrong information in your report can be a simple mistake, or it could indicate a larger problem. In some cases, it can just be a reporting error. In others, it can be a sign of identity theft. When reviewing your credit report, make sure to look at each account on your report closely. If you don’t remember opening it, contact the credit reporting agency and report the error. By law, the agency must look into the issue. It will either resolve the issue in your favor or let you know why it thinks the information is correct.

The information on your credit report might include a misspelling of your name or an address you never lived at, or any other wrong information related to one of your accounts. In most cases, this means a creditor filled in the information incorrectly. In some cases, it means someone’s been using your information fraudulently.

It’s important to dispute any wrong information you find so that it doesn’t impact your credit score in a negative way. 

It’s important to know the information on your credit report so that you can avoid any surprises when applying for any type of credit or a job in the future. Knowing your credit history empowers you to take care of any problems that may be holding you back from building a better financial future. 

The CESI Team is committed to helping you reach your financial goals. If debt keeps you from living the life you dream of, contact us for a free debt analysis today and get started on the road to a brighter future!


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