Your credit report is a record of your current and past debt, as well as your payment history. It's important because it can impact so many parts of your life, including your ability to rent an apartment, buy a house or car, get a loan, and even be hired for certain jobs.
What a Credit Report Is Used For
A variety of businesses check your credit report to make decisions about you. Banks check it before approving you for credit cards and loans, including mortgages and auto loans. Landlords review your credit report to decide whether to rent to you. Some employers even check credit reports as part of the application process.
Your credit report is the sole source of information used to calculate your credit score, a three-digit number that lenders often use to determine how likely you are to pay back a loan. (They may use the score instead of or in addition to your credit report.) High credit scores generally indicate that you have positive information on your credit report, while low credit scores indicate the presence of negative information. Usually, the higher your score, the more likely you are to be approved for a loan.
What a Credit Report Includes
Your credit report includes basic identifying information like your name, address, and place of employment. It also also contains detailed information about your debt, account history, credit inquiries, and some public records.
You may see misspellings of your name or other incorrect information on your credit report. This could be due to a reporting error, but it could also be a sign of identity theft. Because of this, it's wise to report and dispute any errors as soon as you catch them.
When it comes to your account history, such as for credit cards and loans, the report includes information such as the date you opened the account, your credit limit or loan amount, your account balance, and your payment history (including late payments). Bankruptcies are also listed in a separate section of your credit report.
Credit reports also include a list of businesses that have checked your credit history in the past two years either as a result of an application you submitted or pre-qualifying you for a promotional offer. These credit checks are known as inquiries.
How a Credit Report Is Compiled
Creditors that you do business with have agreed to send your debt information to one or all of the credit bureaus, who then update that information in your credit report. Most of the information on your credit card and loan accounts is updated monthly on your credit report, but that depends on the creditor.
Credit bureaus also get information for your credit report from public records. That used to include civil judgments, tax liens and more, but beginning in 2017, they only include bankruptcies on your credit report.
Other types of businesses, such as utility companies, don't usually update your credit report with your monthly payments, but they may notify the credit bureaus when you become seriously delinquent on your payments or your accounts go into collection. For example, your cable bill isn't automatically included in your credit report, but if you fall more than six months behind on your payments, the bill might be listed there as a debt collection.
Unpaid medical bills may also appear on your credit report if a collection agency becomes involved (healthcare facilities don't report debt directly to credit bureaus). Medical providers may turn your account over to a collection agency if it becomes significantly past due. However, all three credit bureaus will wait six months before putting medical debt on your credit history to give you enough time to correct errors or resolve the problem.
Checking and Monitoring Your Credit
Since your credit report affects many parts of your life, it's important that you periodically review the information on it to make sure it's accurate and positive.
You can request your credit reports from each of the three major bureaus at no cost through AnnualCreditReport.com. (Due to COVID-19, they're available weekly though April 2021.) You can also keep an eye on your credit score and report through free tools from companies such as Credit Karma and Credit Sesame.
You should check your credit report from each of the three major bureaus at least once a year to make sure the information listed on it is correct. If you suspect you've been a victim of identity theft, you should monitor your credit report more frequently. You also might check your report more often if you're actively trying to repair your credit or if you expect to apply for a major loan soon.
If you see mistakes or suspicious activity in your credit report, then it's wise to report them to both the credit bureau and the company that reported the information. If you believe that the errors are due to theft, then you can report them on the U.S. government's identity theft website, IdentityTheft.gov.
USA.gov. "Credit Reports and Scores." Accessed June 18, 2020.
Consumer Financial Protection Bureau. "What Is a Credit Score?" Accessed June 18, 2020.
Consumer Financial Protection Bureau. "Check Your Credit Report at Least Once a Year." Accessed June 18, 2020.
My FICO. "What's In Your Credit Report?" Accessed June 18, 2020.
TransUnion. "Do You Know That There Are Three Credit Reporting Agencies?" Accessed June 18, 2020.
TransUnion. "How Long Does it Take for a Credit Report to Update?" Accessed June 18, 2020.
TransUnion. Public Records. Accessed June 18, 2020.
Experian. "Can Utility Bills Appear on Your Credit Report?" Accessed June 18, 2020.
Experian. "Can Medical Bills Hurt Your Credit?" Accessed June 25, 2020.
Federal Trade Commission. "Credit Reports Now Free, Every Week." Accessed June 25, 2020.