How to Read a Credit Report

Your credit report can help you understand your credit history, including why your application for an apartment, credit card or auto loan may have been declined. The report also includes information about your credit score, and it can even help you spot identity fraud early on.

Learning to read your credit report is an important step in understanding and improving your credit.

How To Obtain A Credit Report

According to the Federal Trade Commission, Americans are legally entitled to one free credit report every 12 months. Equifax, Experian and TransUnion each create their own credit reports, and you can use AnnualCreditReport.com to get a free annual copy of each report. Arizona Central Credit Union members can also obtain a free comprehensive credit report through the SavvyMoney tool.

What Is On A Credit Report

While Equifax, Experian and TransUnion may report different information in various orders, generally, the following information is listed in your credit report. The more you know about the information your report contains, the better you’ll be able to focus on the information that matters the most.

Personal information

Your report will outline personal information, including your name, date of birth, Social Security number, address and phone number. Expect to see some of your previous addresses listed, as well as prior names, like your maiden name.

When you review the personal information section, look for any inaccurate information, like an address you’ve never lived at. Incorrect addresses might indicate that someone has stolen your identity and used it to apply for credit. Look into the accounts and credit inquiries sections (detailed below) to see if you find unauthorized credit usage.

Accounts

The bulk of your credit report consists of your accounts. The accounts listed can include both open and closed accounts, like your car loans, student loans, mortgage and more.

Expect to see information about each account, including the date when it was opened or closed, your payment history, the current account balance, your credit limit for each account and any cosigners on the account.

You’ll want to pay close attention to both the accounts and the payment history. Look for errors, like accounts you didn’t open or payments that are inaccurately reported as being late. If you find errors, contact the credit bureau by phone for advice on how to get them fixed.

Credit inquiries

The credit inquiries section includes a list of the times when a business checked your credit. The section includes hard inquiries, where a creditor checks your credit during an application, like a car loan or mortgage application. It also includes soft inquiries, which usually happens if a business checks your credit to see if you qualify for a credit card offer.

Be sure to look for inquiries – particularly hard inquiries – that you didn’t authorize. An unauthorized inquiry can indicate that someone tried to apply for credit in your name.

Employment history

Your credit report will also have employment history that is usually used to help verify your identity. You can request to have inaccurate employer information removed or to have current employer information added.

Consumer statements

The consumer statements section is typically brief. The section includes statements you’ve made to the credit bureau, like if you disputed a charge. This section acts as background information to your credit history.

Public records

If there are public records that could hurt your credit score, they’ll also be included in your credit report. These records include issues like foreclosures, bankruptcies, and tax liens.

What Information Is Not Included In Credit Reports

While credit reports are comprehensive, they don’t include all of the information you might think they would:

• Employment status: Your employer information is included on your report only for identity verification purposes. The credit report doesn’t include information on when your employment began or ended with each employer, and there’s no indication of whether or not you’re currently employed.
• Salary: Just as your employment status isn’t included on your credit report, your salary also doesn’t directly affect your credit rating, so it’s not on the report. Your salary does affect your ability to make your payments on your accounts, though, which can affect your credit rating.
• Assets: Assets like your bank account balances and investments aren’t included in your credit report.
• 401(k) and Loans: Your 401(k) savings aren’t included in your credit, nor are any loans you might take from those accounts. When you borrow from your 401(k) fund, you’re borrowing money from yourself, so this is the one kind of loan that won’t impact your credit rating.
• Marital status: Your credit report always remains yours, even if you’re married. The report won’t include information about your marital status.
• Spouse’s credit history: Even once you’re married, your spouse’s credit history remains their own, and your credit reports won’t ever be merged. However, if you take out joint accounts, like a mortgage for a home you buy together, those accounts will show up on both of your credit reports. If you miss payments on those shared accounts, those missed payments will impact both of your credit ratings.

Dispute Any Errors

If you find any inaccuracies, you can call the credit bureau using the phone number included on the report. Be sure that you have your copy of the report ready when you call.

It’s important to dispute any errors as soon as possible. Errors might indicate that someone has attempted to steal your identity to open new credit lines. Addressing this issue as soon as possible can help to prevent the identity thief from taking out additional credit, and it can minimize any potential damage to your credit rating.

Understanding Your Credit History Is Important To Financial Stability

Your credit history is a valuable tool that can help you to improve your financial stability. Building your credit rating can increase your chances of being approved for a credit card, being able to take out a car loan, or even being approved for your first mortgage. When you understand how to read your credit report, you can spot potential errors before they have the chance to truly damage your credit, protecting yourself against identity fraud.

It’s important to stay on top of your credit score and credit history, and Arizona Central Credit Union’s SavvyMoney credit monitoring makes that easy. We’re also happy to help you explore loans, credit cards, and other financial options. Contact us today with any questions.