What's a credit report and how do I get mine?

Your credit report is like an ever-changing snapshot of how well you manage credit, with "ever-changing" being the operative term. Think of your credit report as a tool you can use to impress potential lenders with your financial savvy. Better yet, if your current report isn't quite as impressive as you would like, there are actionable steps you can take to give it a little polish. 

What is a credit report?

Your credit report is a detailed breakdown of your history with credit accounts (and a few other details). Credit reports are created by credit reporting agencies, or credit bureaus.

The U.S. has three major credit bureaus: Transunion, Equifax, and Experian. Your creditors submit information about you at regular intervals, typically monthly but sometimes less often. 

Let's say you pay your Visa card on time, making at least the minimum payment. Visa sends a report letting a credit bureau know your payment was on time and the account’s status is paid as agreed.

Here's the information you can expect to find in your credit report:

• Personal information, including your name, address, Social Security number, and date of birth. 

• Account information as reported by your creditors. This includes the type of account, the date it was opened, your credit limit or loan amount, account balance, and payment history. 

• Number of recent inquiries, indicating the number of times you applied for new credit in the past two years. 

• Bankruptcies you've filed in the last seven to 10 years (depending on the type of bankruptcy).

• Unpaid child support and/or alimony. 

• Unpaid accounts that have been turned over to a collection agency. 

Why your credit report matters

Credit reports don't reflect who you are as a person or how you lead your life, but they offer insight into how you've managed your finances. Here are five reasons a strong credit report matters:

1. Your credit standing impacts your ability to borrow. Lenders use your credit report to determine your creditworthiness when you apply for a loan or credit card. Negative information on a credit report could make it harder to get a loan, or to qualify for the lowest rate and fees.

2. Your credit history may impact your ability to rent a home. Landlords often check applicants' credit reports to learn more about their financial history. A good credit report could increase your chances of renting the house or apartment you want. 

3. What’s on your credit report could affect whether you’re hired or not. Some employers check applicants' credit reports, particularly if the job they're applying for involves money management. You might enhance your job prospects with a healthy credit report. 

4. Your credit history could affect the insurance rate you pay. Studies have shown that policyholders with a low credit score are more likely to make claims. Insurance companies often charge those with lower scores higher premiums to cover what they view as an additional risk.

5. Staying on top of your credit history allows you to play a more significant role in your finances. You have the right to check your credit report regularly and to identify any mistakes or other issues that may negatively impact your credit history. 

How to get a copy of your credit report

One of the easiest ways to get a copy of your credit reports from all three major credit bureaus is to order them from AnnualCreditReport.com. Equifax, Experian, and TransUnion allow you to request free credit reports as often as once a week. 

Common credit report mistakes to look for

After you receive your credit reports, go over each one line by line. The goal is to identify mistakes and dispute them with the credit bureau. Here are some of the most common errors found on credit reports. 

• Identifying information: It's not uncommon for accounts belonging to someone else to wind up on your credit report. Check that the name, phone number, address, and other identifying information is accurate. 

• Account status: Look at each of your accounts to ensure the open accounts are marked as open on your report, and any you've closed are marked closed. 

• Delinquencies: Make sure any payments marked as late or delinquent were actually late or delinquent.

• Balances: Check the balances shown on your accounts to ensure they're correct. For example, if you've paid off a credit card but it shows a balance of $500, note it. 

• Duplicates: Make sure no debt is listed more than one time.

How to fix errors on your credit report

If you find any errors, no matter how small, contact the credit bureau that created the report as well as the lender or company that provided the credit bureau with the information. When you receive your credit report, it will include directions on how (and where) to file a dispute.

Credit bureaus generally have 30 days to investigate the disputed information on your report. If you send additional information during those 30 days, the credit bureau can extend its investigation by 15 days. Once the investigation is complete, the bureau must inform you of its results within five business days. 

Tips to improve your credit report

No matter what condition your current credit report is in, there are steps you can take to improve it. Here's how to get started: 

• Make all payments on time.

• Pay down credit card balances to keep your credit utilization rate low.

• Set up automatic bill payments to avoid late payments. 

• Limit how often you apply for new credit.

• Handle debt that's gone into collections, either by negotiating on your own or with the help of a debt settlement program. 

• Monitor your credit reports regularly to ensure everything is correct. 

Pro tip: Creditors aren’t obligated to report to the credit bureaus, and some choose not to report to all three. Your credit reports could differ from one another, depending on which credit bureau is providing the information. That’s normal, and as long as the details are correct, differences aren't cause for alarm. 

Other credit report resources

While nothing quite beats getting your hands on your actual credit report, you may be interested in getting your credit score as well. That three-digit number between 300 and 850 helps determine whether a loan application will be approved. 

You can check your credit scores for free from a variety of sources.

• Banks, credit unions, and credit card companies. Start with the companies you already do business with. They might already provide free access to your credit scores. 

• Experian: Provides free access to your FICO Score, the most common score used by lenders. You can sign up at Experian and get instant online access to your score.

Free credit score websites: You can get your VantageScore for free online from a number of reputable websites. Thousands of creditors rely on your VantageScore, but it’s not as widely used as the FICO score. Just be sure you don’t accidentally sign up for something that costs money. If you reach a screen asking for your credit card number, close the window and start over. 

Your credit report and credit score aren't etched in stone. You can start improving them today by taking steps to give them a boost. That could put you in a better position in the future to get the loans and credit cards you