It is important to know how to check your credit report and score, as monitoring your credit report can assist you in improving your score and catching identity theft early.
Your credit report contains a wealth of information about you, your finances and your debts. This information can be viewed by potential lenders as well as employers and landlords. By learning more about the information on your report and how this information will impact your score, you will be better prepared to improve upon or rebuild your credit score.
What is a credit report?
A credit report is a record of your finances and debts that projects a rating of how well you handle your money and how well you are likely to repay a loan. This rating is referred to as a credit score. The higher your credit score, the better. A low score can have a detrimental impact on your life and make it more difficult for you to obtain a loan, gain employment or get an apartment.
Who can obtain your credit report?
Your credit report will be reviewed whenever you apply for any type of loan or line of credit, including when opening certain types of accounts, such as a cellphone contract or when obtaining home services, such as landline phone, cable and internet services.
Not only can your credit be pulled by lenders, but employers have begun to more commonly review a person’s credit during an application process. To determine whether or not to rent to you, landlords routinely review credit reports to look at your history as a whole or for specific derogatory marks, such as collections or poor payment history related to previous housing.
Information Included in Your Credit Report
Your credit report will include basic information about you, including your name, employer and address. In addition to this personal information, your report will contain detailed accounts of your financial and debt information, including:
- Credit cards.
- Auto financing loans.
- Personal loans.
- Student loans.
Each financial record will include the type of loan that the debt is as well as your credit limit, balance, original loan amount and payment history. Since your payment history can be included in your credit report, any missed payments, late payments or default statuses are also likely to appear. A credit report also has financial public records, such as tax liens, repossessions, foreclosures and bankruptcies.
Your credit report will detail your overall length of credit by determining which loan you have had opened for the longest. However, once a loan has been closed or paid off, the closed account will no longer assist you in the same way it had.
How does information get onto your credit report?
In the United States, the three credit bureaus are Experian, TransUnion and Equifax. Any time you choose to do business with any type of lender, that lender has already agreed to provide at least one of the three credit bureaus with your personal and financial information for the life of your loan or account.
Most types of accounts report to at least one credit bureau monthly. These reports will include several key pieces of information, including your debt amount, payment history and original loan amount. Late payments may still be reported to a credit bureau, even if a late fee was waived or an arrangement was made on the account.
How does your credit report and score affect your daily life?
Your score is considered to be a reflection of how well you handle finances. Your credit score and report will determine whether or not you can qualify for a loan, the loan terms and more. Your credit score can even determine whether or not you are offered an employment opportunity or whether or not you get an apartment that you apply for.
Find Out How to Get a Credit Report
You can obtain a copy of your credit report in several ways, including by purchasing your report from one of the three credit bureaus. You are entitled to one free report from these credit reporting agencies each year.
You can also access your credit report through several reputable companies. These agencies offer credit reporting services at little to no cost. In addition to allowing you to check your credit score and report, these websites provide additional functionality, such as email alerts or reminders to ensure that you check your report regularly.
Should you avoid having too many credit inquiries?
A credit inquire occurs when a lender pulls your credit history and score to determine how risky of a customer you are. Credit inquiries have a minimal impact on your credit score and report. These inquiries will typically be removed from your credit report after a few months.
Additionally, multiple inquiries made within 30 days do not generally continue to impact you for the first month, ensuring that you have the opportunity to review multiple lenders in an attempt to obtain the best loan possible. You can also review your score and report as many times as you would like without those reviews being applied to your credit report.
Building or Rebuilding Your Credit Score
Your credit report will inform you of the aspects that are harming your score most so you can repair or build your credit. Depending on your situation, that could be factors such as the number of credit accounts you have open, your credit utilization or payment history.
Your credit score will suffer if you have a high credit utilization. Credit utilization is calculated by reviewing the total amount of debt and total available credit on open accounts. For example, if you have a credit card that has a $1,000 credit limit and you have a balance of $200, then you would have a 20 percent credit utilization. The lower your credit utilization, the higher your score.
If you have a poor payment history, making timely payments going forward on all of your accounts can assist you in turning your credit score around. Additionally, it is important to take care of delinquent or defaulted accounts.
Obtaining a credit card can assist you in building and repairing a credit score, so long as you make your payments on time and refrain from carrying a high balance. If you have trouble qualifying for a credit card, a secured credit card may be the best option for you, as the deposit you pay upon enrollment will become your line of credit, which eliminates any risk to the lender. Once you have a credit card, experts recommend that you rebuild your credit by using the card to pay a bill that you already have, such as gas or a cell phone bill, and then immediately paying off the balance.
Keep in mind that your credit score will not drastically change overnight. It can take months or even years to build or rebuild your credit score and your credit report.