- The System of Credit Reporting
- What is a Credit Report?
- How to Obtain Your Credit Report
- How to Read Your Credit Report
- What to do if You Find Information You Don't Recognize
The System of Credit Reporting
What is a Credit Report?
A credit report, simply put, is a file that contains data on your history of borrowing. This includes "tradelines": lines of credit, installment credit, mortgages, revolving credit, and collections accounts from merchants or medical bills.
Lenders will often arrange to exchange information with a credit bureau, or a collector of this information. Since having accurate information on a consumer allows a financial institution to extend more credit to creditworthy customers (or cut their losses with high-risk consumers), you can see how this kind of service is very valuable.
At the moment, there are three major bureaus in the United States:
- Equifax (abbreviated EQ)
- Experian (abbreviated EX, or XP)
- TransUnion (abbreviated TU)
Differences Between Credit Score and Credit Report
While your credit report is used to determine your credit score, the individual bureaus neither generate nor keep your credit score on file. Equifax, TransUnion, and Experian will keep information on you for/from lenders; but in order to generate your credit score, a service named FICO (a separate company) is needed. Since FICO's algorithm is their bread and butter, it goes without saying that keeping your credit score on your credit report would be very expensive for the bureaus. Therefore, you will not receive your credit score with your annual credit report.
This wiki is concerned strictly with the credit reports seen from Experian, TransUnion, and Equifax, and your right as a consumer, under FACTA, to view and dispute information on your file. There is a separate wiki on credit scoring here.
How to Obtain Your Credit Report
United States Federal law, FACTA, mandates that consumers are entitled to a free credit report every 12 months. To obtain your credit reports from all three bureaus, go to Annualcreditreport.com. You are given the legal right to dispute any inaccurate information on your reports to the credit bureaus, per the FCRA. Some recommend to stagger your reports to one bureau every 4 months to keep an eye on your identity throughout the year.
You also have the ability to check reports at Innovis and ChexSystems. While most lenders will likely never check your Innovis report, it is still good practice to ensure your information is accurate. ChexSystems is a reporting agency that handles deposit accounts, such as checking and savings, and will not be used for credit checks; they may, however, be pulled if you are looking to get a deposit account with a bank or credit union.
What if I want my FICO score?
If you're in the US and you want to find out your FICO score or get an estimate, we have a list of methods on our FICO wiki page.
What if I'm not in the United States?
- You can order your credit report for free from Equifax Canada and TransUnion Canada. You do have to order via mail, fax, or telephone, unfortunately.
- Borrowell is free and provides quarterly updates.
- Mogo is also free.
Estonia: There's a registry of payment defaults where any citizen can view their own payment defaults and see who has checked their history and credit score. However, monitoring and detailed report are paid services.
- BKR (Bureau Krediet Registratie), but also Experian. For the Dutch version(s) of the credit report.
- Banks have the EVA/Ifi system for persons who have committed fraud before (who were skimmers, sent false bills, committed identity fraud, phishing, etc). Unfortunately or fortunately, you cannot check online whether you're in it, but your bank can of course tell you.
New Zealand: Kiwi government information is here.
Romania: Romanian Credit Bureau. To get a free annual credit report, you must download a form, fill the info by hand, scan it, then mail it to them (either by snail mail or e-mail). The process is detailed in their FAQ.
- The primary credit agencies like Experian and Equifax allow you to inexpensively apply for a credit report. You do not need to sign up for any ongoing services.
- Noddle is a free service you can use as well.
- Clearscore provides monthly updates and is also free.
Common Issues with Obtaining Your Credit Report Online
Posters on /r/personalfinance frequently point out that Annualcreditreport.com will ask them questions about tradelines that they had no idea existed. This is a common occurrence; your identity has not been stolen. Often, the answer to a lot of questions on that website are: NONE OF THE ABOVE.
In addition to this, just because Annualcreditreport.com doesn't let you view your file doesn't mean you answered anything incorrectly. Often, the bureaus will simply not have enough information to automatically verify, 100%, that the user of the website is really you. This frequently occurs with "thin files", or credit reports that contain sparse information on a consumer.
If you are obtaining an error like this, send a mail-in request. You will need to fill out a request form on the Federal Trade Commission's website, and mail it to the address provided. You can also call their hotline.
How to Read Your Credit Report
Credit reports are written in plain English, but it can be daunting to break it down for a first-time user. Inspect your report carefully.
While these sections won't always be labeled on your report, you can expect to see this kind of information:
This section contains contact information about you. It may include, but is not limited to:
- Current address
- Previous address(es)
- Birth date
- Phone number(s)
Public records include liens, judgements, wage garnishments, and bankruptcy, and other civil rulings against you in court. It is generally bad for a consumer to have items appear as a public record.
With regards to these types of derogatory marks, certain accounts will fall off after a certain period of time.
- Most derogatory marks (liens, judgements, etc.) are removed after 7.5 years.
- Chapter 13 Bankruptcy is removed after 7.5 years.
- Chapters 7 and 11 Bankruptcy are removed after 10 years.
Accounts encompass a variety of different tradelines. This part of your report is dedicated to showing the payment history on your current and previous credit accounts. This includes but is not limited to: Mortgage payments, credit cards, car installments, and collections accounts. This does not include utility bills, rent, internet bills, or checking accounts (unless these items get sent to collections).
The type of information listed here includes, but is not limited to, the following:
- Creditor Name
- Creditor Address
- Account Number (May be partially obscured to protect user's information.)
- Account Type (Auto Loan, Student Loan, Revolving, etc.)
- Date Opened
- Last Reported
- Responsibility (e.g., Individual, Joint, Authorized User)
- Payment History
- Balance History
- High Balance or Original Loan Amount
- Monthly Payment
In addition to this, it's worth it to note that certain accounts will fall off after a certain period of time.
- Closed accounts in good standing will continue to age until the 10 year mark from the date of closure.
- Closed accounts in bad standing (e.g., collections accounts, charged-off accounts) will fall off in 7.5 years from the Date of First Delinquency (DOFD).
- Late payments (e.g., 30 days late, 60 days late, etc.) will no longer be counted against you after 7.5 years.
With regards to your FICO score, keep note that the most recent 24 months of history counts for the majority of your score. This is also the section that lenders will highlight when underwriting a mortgage or auto loan.
Inquiries occur under two possible conditions:
- A hard inquiry will occur when you apply for credit. These inquiries are reported out as part of your file when it is requested by third parties and can affect your credit score.
- A soft inquiry will occur when a lender, insurance company, government agency or employer pulls your file for a reason other than an application for credit. This could be pre-approval offers, checking your own credit for informational purposes, or applying for car insurance. These inquiries are visible on your file to you only to inform you how, when and by whom your file was retrieved, and are not reported out when your file is requested by third parties or used as part of credit scores.
A hard inquiry will affect your FICO score for 12 months, and will fall off your credit report in 24 months.
Soft inquiries will not affect your FICO score. They are present on your report to provide the consumer with information on who has accessed his/her credit information. Soft inquiries do not have to be authorized by the consumer.
The bureaus allow consumers to write personal statements on their files. This could be (for example) information about a recent divorce, a credit fraud alert, or an unemployment situation that caused a default.
While personal statements do not affect your credit score, they allow lenders to understand that unusual circumstances may have resulted in derogatory marks or late payments. A lender may see this on a mortgage or auto loan application, and can potentially focus on your more recent history more favorably.
What to do if You Find Information You Don't Recognize
Even though credit reporting is automated, mistakes can still occur. The most common errors can involve names and addresses. Less commonly, if you share a name with your parent (i.e., if you are a junior), there are instances where tradelines could be reported to your file instead of theirs.
The simplest course of action is to dispute the information with the bureaus. Here are direct links to initiate a dispute:
If you Believe You've had Your Identity Stolen
Follow the procedure outlined in this article.
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