A credit report is a detailed record that contains a consumer’s credit history. It is commonly used to help determine someones creditworthiness. Creditors and lenders will look at a person’s credit history before deciding if they will lend to them. Also this will help determine how much and at what interest rate they will give them. Insurance companies have used these reports to determine premiums, and prospective employers review reports to establish the character of the job candidate. Even some landlords will pull your credit to see what type of tennant you will be when it comes to paying your rent.
Credit bureaus are private companies that collect and compile data for your credit report. Creditors provide these bureaus with information on how their customers pay their bills. The bureau assembles this information, along with public record information, into a file on each consumer.
There are over 1,000 local and regional credit bureaus throughout the United States. Most credit bureaus are either owned or under contract to one of the nation’s three major credit reporting agencies, TransUnion, Equifax and Experian. The major credit reporting agencies maintain data for more than 170 million Americans.
It is important to realize that credit bureaus do not rate credit. Each bureau operates differently, by the way they obtain and calculate your score. Credit reporting agencies simply supply lenders with the contents of credit reports, which they can review in order to assist them in making their decision. Many times, the decision does not have anything to do with the credit report itself, but instead is based on things like income, length of residence, or employment.
Types of Reports
There are two types of credit reports. They are:
- Consumer Version: Consumers are the only ones who have access to this version. A consumer version of a credit report lists all inquiries including promotional inquiries, account numbers and account management inquiries.
- Business Version: The business version is an abbreviated version of the consumer version. This is the credit report that lenders see. The business version does not contain promotional inquiries, account numbers or account management inquiries.
Contents of a Credit Report
There are four primary categories of information contained in each type of credit report. They are:
- Personal Information
- Credit History
- Public Records
- Full Name
- Date of birth
- Current and previous addresses
- Telephone number
- Social Security number
- Current and previous employers
A credit history is the record of how a person has managed his or her credit in the past, including total debt load, number of credit lines, and timeliness of payment. It is used as a guide to determine whether the consumer is likely to pay accounts on time in the future. A credit report’s credit history section generally includes a listing of the credit accounts from the last ten years. Types of credit accounts include:
- Retail credit cards
- Bank loans
- Bank credit cards
- Finance company loans
The credit history section also shows how financial obligations have been managed. Each entry includes information such as:
- Account number
- Creditor’s name
- Amount borrowed
- Amount owed
- Credit limit
- Dates when the account was opened, updated, or closed
- Timeliness of payments
- Late payments (these are noted as a negative activity)
A credit report’s public records section includes:
- Tax liens
- Court judgments (including child support judgments)
A credit report’s inquiries section includes a listing of creditors, or authorized users, who have requested a copy of a consumer’s credit report. When a lender or creditor asks a credit bureau to look at your credit report, that inquiry may get noted as part of your credit history.
There are two types of inquiries:
- A hard inquiry occurs when a lender with whom you’ve applied for credit reviews your credit report as part of their decision-making process. This type of inquiry appears on your credit report and can influence your credit scores.
- A soft inquiry occurs in cases where you check your own credit or when a lender or credit card company checks your credit to pre-approve you for an offer. Soft inquiries do not impact your credit scores.
A credit report does NOT include information regarding:
- Sexual orientation
- Medical history
- Criminal record
- National origin
- Personal lifestyle
- Checking or savings accounts
- Political preferences
Ordering & Reviewing Reports
Once a year you can order your free credit report online from annualcreditreport.com or call 1–877–322–8228.
The following information is required when ordering credit reports:
- Social Security number
- Date of birth
- Current and previous addresses for the past five years
- Maiden name (if applicable)
As you look through your information, check for errors such as misspelled names or incorrect numbers. Those kinds of errors can signify an issue with data entry like accidentally entering another person’s information under your name. It can also alert you to fraudulent behavior. Other errors like seeing a property you never bought or loans you don’t remember taking out are definite red flags.
Here is the Consumer Finance Protection Bureau’s list of what else to check for:
- Closed accounts reported as open
- Incorrect balances
- Incorrect credit limits
- Being reported as owner of an account that you were an authorized user for
- Incorrect dates
- Accounts inaccurately labeled as late or delinquent
- Accounts listed multiple times
If you see any mistakes or major red flags, you can file disputes with the credit bureau or creditor. If this all feels to overwhelming and challenging for you to do on our own, you can contact the experts at a credit repair company to walk you through the process and dispute these incorrect or negative items on your behalf.
Credit reports should be accurate, but it is important to make sure that they are. If there are errors or outdated information on a credit report, it could hurt the consumer’s chances of getting a new loan. Each agency initiates an investigation of any credit information disputed by a consumer. It is recommended that the consumer not apply for credit while a dispute is being investigated.
Investigations are usually concluded within 30 days of the date that notification was received from the consumer. If additional information is needed for the investigation, the credit reporting agency will inform the consumer of what is needed to process their dispute. As part of its investigation, the agency will check with the creditor whose information is being questioned. If the agency finds that the information in the credit report is inaccurate, the creditor must notify the other major credit reporting agencies of the error so they can correct their information. If the disputed information cannot be verified within a 30-day time frame, the disputed item is deleted from the credit report or updated as requested. However, if the disputed information is subsequently verified, it will be reinserted into the report and the consumer will be notified.
How Lifeguard Credit Solutions Can Help
If all of this seems too overwhelming and you don’t know where to begin on your own, contact us! We are the experts and we are here to help. When you schedule a free consultation we will review your credit report and discuss a plan on how we can remove the negative, inaccurate, miscellaneous items of of your report.