ITRC Fact Sheet 128
Reading a Credit Report
A credit report is the report generated by a Credit Reporting Agency (CRA) of your financial history. It is a report card of your credit worthiness, your payment history and an assessment of your reliability to repay debt. The main purpose of the report is to provide credit issuers with information to allow them to decide whether or not to extend credit.
Who are the CRAs? There are three major CRAs – Experian, TransUnion and Equifax. These are businesses, federally regulated and independent of each other. The CRAs collect information from various credit issuers. This includes companies that you may already be involved with and those companies who you may be applying to for credit. They may also collect information from public record data sources, such as court systems, tax records, property records, etc.
It is important to note that under federal law (Fair Credit Reporting Act) the CRAs are not responsible for verifying the accuracy of the information they collect. Their function is not to verify information about consumers, but the collection and distribution of information about consumers to credit issuers.
Standard consumer credit reports include:
- Your personally identifying information (PII); name, current and previous addresses and phone numbers, Social Security Number, and date of birth.
- The name of your employer and your spouse's name.
- Information about any credit accounts you have had in the past seven years (open or closed), collection notices, inquiries initiated by credit applications, liens or judgments, and federal district bankruptcy records.
- The names and addresses of those who have reviewed your report to send you a promotional offer.
- Statements added by the consumer which may include a fraud alert or statements of dispute.
The ITRC recommends that adults view a copy of each of his or her reports yearly to make sure that no inaccuracies have become attached to your report and to monitor for fraudulent activity. There are three federal guidelines that allow you to get a free credit report from each of the CRAs.
- If you are denied credit, you can get a free copy of your report to see what the problem is.
- If you are an identity theft victim with a copy of a police report.
- Everyone who has credit in the U.S. is allowed to view their credit reports for free once every 12 months.
The annual free credit report system contact information is (877) 322-8228. They will ask a set of questions (automated phone system) to confirm your identity. They will then send out the requested credit report. We suggest that you stagger these reports. For example, you can receive one from Experian in January, TransUnion in April and Equifax in August. By January, you will qualify for one from Experian again. This is a great way to monitor your credit for free.
The ITRC recommends you check to see if you have a credit report when you turn 18, or just before. If you have never had credit, rented an apartment or had utility service you will not have a credit report. If you do have a report, contact the ITRC for assistance.
There are many ways that incorrect information can appear on your credit reports. Here are a few:
- Typographical mistakes or errors in processing an application may cause errors on report.
- Information added due to applications made in your name by another person.
- Incomplete or erroneous information on an application which was provided to the CRAs.
- Inaccurate reporting of information by the credit issuers to the CRAs.
- Failure of a credit issuer to correct an error in billing or updating after a dispute is settled.
- Mismatches by computer systems that are trying to find the best file match for the information provided.
If you see a problem on your credit report, you should contact the CRAs. Each report will have a “report number” and a phone number for the CRA which you can call to notify them the information is inaccurate. We also advise that you follow the telephone call with a written dispute form. Mail it, with any other documentation you have, certified, return receipt requested. Various states have laws that could help you to clear records. It is also necessary that you contact the individual credit issuer or collection agency in writing as well. Please follow steps from ITRC Fact Sheet FS 100 – Financial Identity Theft: The Beginning Steps.
Each CRA uses a different format; however, the main sections are basically the same. The below sections will be found within your credit report:
- Header: This is personal information and includes your name, addresses (both current and former), date of birth, and Social Security Number.
- Judgments and Liens
- Bankruptcy Information: Depending on the form, this may be part of the 7-year history or a separate section.
- 7-year credit history: This section includes any accounts that you have held during the last seven years. If the account is closed by you, it should be marked “Closed by Consumer.” The date when the information will be removed from your report may be indicated. Each account should show the name of the company, account number, type of account, date opened, date of last activity, terms of payment, any negative information about the account and date last reported.
- Credit Inquiries Initiated by the Consumer: These are inquiries that were started because of an application turned in by the consumer to a credit issuer. In that same section, you may find inquiries done by companies with whom you currently do business. These companies are verifying that you remain in good standing with your other creditors.
- Other Requests: These are inquiries done by companies that may want to send you a pre-approved credit offer.
All of the information in your credit report is used to determine your credit score. A credit score is a logarithmic calculation that represents how creditworthy you are. The higher the score, the more reliable you appear to be. Some of the things used to determine your score are: your income, age, credit history, the amount of money you owe, if you are paying your monthly bills in a timely manner, and if you have ever had a bankruptcy in your name.