The dreaded credit report. Scary, isn’t it? Much like your “permanent record” in every teen movie, it can often seem like your credit report determines your entire future.
What’s more is that, for most, your credit report is shrouded in mystery. Information surrounding how to access your credit report, what’s included on your credit report, and even what your credit report is used for may feel like a big question mark.
We’re here to demystify credit reports for you. Read on to learn about credit reports, how to access them, and why they’re important.
Have a particular question about the three credit bureaus? Jump to it using the links below:
- What is a credit report and why does it matter?
- What are credit bureaus?
- Where do credit bureaus get their information?
- What are the 3 major credit reporting agencies?
- How do I get a copy of my free credit report?
- What is a credit monitoring agency?
- What do I do if my credit report has incorrect information?
What is a credit report and why does it matter?
Before diving into your credit report, it’s important to understand “credit” itself. Most associate credit with credit cards, but “credit” refers to more than that. Any loan you’ve taken is considered credit. That may be a loan in the form of a credit card, which you pay off monthly, or a student loan, car loan or lease, home loan, or any other type of money you’ve borrowed.
A credit report contains information about the historical and current status of all of the above. Creditors (those who lend you money) submit information to credit bureaus, also known as credit reporting agencies, who compile that credit information into your credit report.
Your credit report also may contain the following information:
- Your personal information, including name, address(es), birthdate, SSN, and phone number(s)
- Your credit accounts
- Current and historical credit accounts
- Creditors name
- Credit limits
- Account balance
- Payment history
- Your collection items
- Your public records
- Civil suits
- A list of inquiries – or companies that have accessed your credit report
Typically, negative information like late payments, delinquent accounts, charge offs, and more stay on your credit report for 7 years, and bankruptcies stay for 10.
What are credit bureaus?
Credit bureaus are for-profit companies that aggregate information from creditors, public records, and other companies, and then compile the information into your credit report. These reports are then sold to companies who would like to legally access your credit information, like a landlord or a creditor with whom you’re applying for a loan.
Credit bureaus are not government owned or related to banks in any way. That said, these companies are regulated by the government through a piece of legislation called the Fair Credit Reporting Act (FCRA).
This act ensures the following:
- You have the right to request access to your credit report once per year
- Your credit report can only be accessed by those with a valid need and you have the right to know who accesses your credit report
- You have the right to dispute anything in your credit report and the credit reporting agency must investigate and remove any inaccurate information
- Negative information must be removed from your file in 7 years and bankruptcy in 10
- Your credit report cannot contain medical information
- You have the right to sue anyone who violates the Fair Credit Reporting Act and seek damages in court
- And much more
Where do credit bureaus get their information?
Credit bureaus source their information from a number of different sources. First, creditors report your credit information to credit bureaus. This may be a bank or retailer with which you have a credit account or a loan company you’ve borrowed from in the past.
Creditors are not legally required to report information to all three of the major credit reporting agencies, which is why your credit information may vary from report to report. While most of the larger creditors relay your credit information to all three credit bureaus, smaller creditors may only relay their information to one.
Credit bureaus also source their information from debt collectors and public reports, like bankruptcies, liens, or court records.
What are the 3 major credit reporting agencies?
While the market used to be full of numerous credit reporting agencies, these days it’s dominated by 3 major credit bureaus: Equifax, Experian, and TransUnion.
As separate companies, credit bureaus don’t share information between each other, which is why your credit report may vary slightly from company to company. Each bureau collects its own information with slightly different focuses.
How do I get a copy of my free credit report?
The Fair Credit Reporting Act entitles you to one free credit report from each of the three major credit reporting bureaus each year.
But for many, accessing that credit report can feel like an impossible task. A quick search for credit report in any major search engine bombards you with credit reports for purchase.
In order to access your free annual credit report from each bureau, simply go to the aptly named www.annualcreditreport.com, or call (877) 322-8228. With a bit of identifying information, including your name, address, date of birth, and SSN, you’ll have your credit report in no time.
You may get all three of your free reports at once, or space them out as you choose—just remember that your information may vary from report to report.
For example, a report you access today from TransUnion may feature a particular blemish. When you download a separate credit report from Equifax 4 months later, you may no longer see that blemish on your report.
This may give you the false sense that the blemish has reached its full lifespan and fallen off your report. In reality, however, the blemish may have never existed on your Equifax report to begin with. It may, therefore be best to view all 3 in tandem.
What is a credit monitoring agency?
A credit monitoring agency or credit monitoring service is used to track an individual’s credit reports and scores and notify the individual of any changes. This may include the addition of new accounts or an inquiry into their credit report.
Credit monitoring agencies’ primary function is to monitor for illegal activity, such as identity theft. A criminal may open new credit accounts or make large purchases that require credit checks in your name, causing lasting damage to your credit report.
However, many offer additional services, including extensive credit score tracking and scans for personal information, including bank and social security information, across the web.
What do I do if my credit report has incorrect information?
If you spot incorrect information on your credit report, it’s important to dispute it.
The Fair Credit Reporting Act states that both the creditor and credit bureau are responsible for correcting inaccurate information, but they largely leave it in your hands to identify.
If you find inaccurate information, you may write a dispute letter to the credit bureau identifying the issue and explaining the dispute. You can also do this online at each credit reporting agency’s website, or file a dispute directly with the creditor who originally reported the wrong information.
Include documentation that supports your dispute and keep copies of everything for yourself.
Want to see a dispute in action? Let’s take a closer look at TransUnion’s dispute process, as TransUnion’s credit report is what Turbo uses to give you insight into your financial health.
You can file a dispute (fee-free) by phone, mail, or online.
Upon receiving your request, TransUnion initiates an investigation of any credit information that you are disputing. TransUnion may then alter your credit report based on the information you’ve provided, or contact the company that reported the information you’re disputing.
TransUnion will supply the company with any documentation you provided, along with any necessary supplemental information. The company is instructed to review the dispute, verify their information, provide a response, and update their records accordingly.
If you initiated your dispute using their online form, you’ll be notified via email when results are available online. If you initiated your dispute via mail or phone, you will receive results by mail.
While most of the information collected by the three separate credit bureaus is similar, there are key differences to keep in mind when requesting a credit report.
Your information may vary between credit reporting agency, but it’s important to keep an eye out for errors and file a dispute if anything seems awry with your report.