Fact Sheet 128  

HOW TO READ YOUR CREDIT REPORT, SCORES,
AND RECOGNIZE IDENTITY THEFT  

What is 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. If you consider each of the CRAs as large data warehouses you will start to understand your report. The reports main purpose is to provide credit granters with information to allow them to decide whether to extend credit.

Who are the CRAs?   There are three major CRAs (credit reporting agencies) – Experian (formerly TRW), TransUnion and Equifax. These are businesses, federally regulated and independent of each other. Their main customers are not YOU, the consumers, but credit issuers and businesses that rely on the information to make decisions about your credit worthiness.

How do they get the information that is recorded? The CRAs collect information from 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.

How do the CRAs know the information they are collecting is accurate? They don’t. By federal law (Fair Credit Reporting Act) they are not responsible for verifying the accuracy of the information they collect. Their main function is the collection and distribution of information about consumers to credit issuers.

What does a standard consumer credit report include?  

• Your name, current and previous addresses and phone numbers, Social Security Number, and date of birth

• 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, 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

How much does a copy of your credit report cost? 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 think you are an identity theft victim - this is not part of the free annual report program.
• Free Annual Reports: Everyone who has credit in the United States is allowed to view their credit reports for free once every 12 months. The ITRC recommends you get your first set of reports 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. That is good news.

After you see the first reports we suggest you stagger your reports - get one from (for instance) Experian in January, TransUnion in April and Equifax in August. By January you will qualify for one from Experian again. That way you set up a system to check your reports for mistakes more frequently than once a year. 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.  

• 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
• "Close enough is good enough” attitude of the CRAs and credit issuers – mismatches by computer systems that are trying to find the best file match for the information provided.   

Who should I notify if I see a problem?   Each report will have a “report number” and a phone number for the CRA. You can call to notify them the information is inaccurate. We also advise that you follow the call up with a written dispute form and send it with any other documentation you have. It should be sent 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 step from Fact Sheet 100, The Beginning Steps.
What should I be looking for in my credit report- what areas will problems show up in?

Each CRA uses a different format. However the main sections are basically the same.

• Header: This is personal information and includes your name, addresses (both current and former), date of birth, and Social Security Number
• 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 (overdue notices) and date last reported.
• Collection agency or bankruptcy information: Depending on the form, this may be part of the 7-year history or a separate section.
• Experian and TransUnion: Inquiries initiated by the consumer- these are inquiries that were started because of an application turned in by the consumer to a credit issuer. Other Requests: These are inquiries done by companies that may want to send you a pre-approved credit offer. In that same other 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.   
• Equifax: These two sections of inquiries are blended together are each inquiry is marked with a code so that you can separate them out.

What is a Credit Score?   A credit score shows how creditworthy you are. As with a report card, you are striving to have a high score which shows you are more reliable. Some of the things that help 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.
There are two credit scoring systems now.
FICO (Fair Issac) was the old system and is still being used. The highest FICO score is 850 points. With FICO if your score is lower than around 630, you are considered a higher risk consumer.
The three CRAs have a new system. It is called the VantageScore.

SCORE    GRADE      CREDIT OUTLOOK
901-990           A         Excellent rating; low interest rate
801-900           B           Good rating but short of excellent
701-800           C          Fair; moderate risk
601-700           D          Higher risk means higher interest rate
501-600           F           Highest risk; may not qualify for loan

SOURCES: Equifax; Experian; TransUnion

Copyright February 2007, Identity Theft Resource Center®, all rights reserved.

Created by ITRC

T his fact sheet should not be used in lieu of legal advice. Any requests to reproduce this material, other than by individual victims for their own use, should be directed to ITRC.