The Truth About Credit Reports: What Are They & How to Get Them for Free

The Truth About Credit Reports: What Are They & How to Get Them for Free

Having good credit is essential to a healthy financial life and to ensure that you’re able to do things you want to do such as purchase a vehicle or house, or even get a cell phone contract.

Many people aren’t aware of what their credit score is, how it’s determined, or how to improve their credit score if it’s not where they’d like it to be. In this article, we look at the credit report, which is where you go to find out everything you need to know about your credit and to see what lenders see when they consider lending you money.

What is a Credit Report?

A credit report is a document that details your credit history, activity, and your current state of ‘creditworthiness.’ Because multiple agencies report on your credit, most people have more than one credit report. These reports contain information such as your payment history, how much you owe, and your general financial history. In the United States, there are three reporting agencies: Equifax, Experian, and TransUnion.

The importance of the credit report is that it’s used by lenders and companies who decide whether you’re an acceptable risk to lend money, extend credit, or offer a contract to. And, it’s not just banks who use credit reports; it’s companies like cell phone providers, cable companies, and utility companies who look at the information and decide whether to provide you with their product or service based on the information therein.

Most credit reports contain the following information:

  • Your personal data such as your name, address, date of birth, social security number, and phone number.
  • Credit accounts, including mortgages, vehicle loans, credit cards, and store cards. This information also includes your balances for each account, your payment history, the date the account was opened or closed, and your credit limit.
  • Also included in the credit reports are incidents such as bankruptcies, foreclosures, credit inquiries, and liens.

As you can see, your credit report contains quite a bit of information about your financial and credit health, which is why it’s vital you know what’s in it so you can improve areas that are bringing you down or dispute items that are in error.

How Often is it Updated?

In general, your credit report is updated every 30 to 45 days, and upon getting updated, your credit score will reflect any changes very quickly. Keep in mind that while most creditors report to the agencies every month, they may report at different times of the month and may not report to all three credit bureaus. So, while your score and information may be decent in one report, it may not be so good in another if they both don’t have the same information; that’s why it’s essential to get your credit report from all three bureaus to get an accurate picture of where you stand in relation to credit.

If you’re worried about your credit score, remember, these scores are usually calculated when a lender requests that information. The score you get when you request your credit score depends on which company was used to score your credit, which bureau supplied the data, and what your score will be used for, such as a loan. If your score isn’t where you’d like it to be, you can take measures to put it in the right direction and see results quickly if you work hard.

what is a credit report

Which Report is the Most Accurate?

Since all credit bureaus have to follow the same laws, it’s not prudent to say which one is the best or most accurate. While these companies are for-profit businesses and do compete with one another, there isn’t an advantage for one to ‘skew’ your credit one way or the other. Also, keep in mind that you won’t know which agent your creditor will check when you’re applying for a loan or credit; and while your credit may look pretty good on one report, it may not be so hot on another. Keeping track of your credit report from each agency is key to getting a good picture of your credit health and staying on top of issues that could drag down your score. And, because errors on one report don’t necessarily make it onto all three, it’s essential to look at all of them to make sure all of your information is accurate.

How to Get a Free Credit Report

According to the FTC, everyone is entitled to get one free copy of their credit report every 12 months from each of the major credit reporting agencies thanks to the Fair and Accurate Credit Transactions Act of 2003. You can go online to get your report at annualcreditreport.com or by calling 1-877-322-8228. Free credit reports are also available by checking Credit Karma or Credit Sesame.

You’re required to give them your name, address, social security number, and DOB to make sure you are who you say you are.

There are other situations in which you can get another free credit report such as if you’re unemployed and will begin looking for a job soon, if you’re on welfare, if you’ve been a victim of identity theft and have errors on your credit report because of it, and if you’ve been denied credit because of information contained in your report.

To find out where you stand in regards to your credit it’s essential you get a copy of your credit report every year; it’s free, and this report plays a huge role in your ability to use capital to improve your life or make large purchases.

Also, reviewing your credit report as you would your bank statement allows you to find out if there is any misinformation that could be dragging your credit score down or keeping you from getting credit. Finally, information on a credit report is often the first sign that someone has been a victim of identity theft.

If you need help deciphering your credit report, or assistance in rebuilding your credit score, contact credit repair attorneys today!