Credit Reports: Frequently Asked Questions
Your credit reports affect the interest rate you pay, whether you are approved for a loan or apartment and sometimes the cost of insurance. These answers cover how reports work and how to manage them.
What is the difference between a credit report and a credit score?
The report is a detailed record of your credit accounts and payment history. The score is a number calculated from the report using a scoring model. Different models, and different bureaus, can produce different scores, so do not be alarmed by small variations.
How can I get my reports?
Federal law entitles you to free reports from each nationwide bureau through AnnualCreditReport.com. Beware of copycat sites. You can also learn more about your rights at consumerfinance.gov.
How long do negative items stay on my report?
Most negative information, such as late payments and collection accounts, can be reported for a number of years, while bankruptcies can remain longer. Positive accounts can stay on your report for a long time too. The time limits are set by federal law, and the clock generally starts from the date of the original delinquency.
What affects my score?
The main factors are payment history, how much of your available credit you are using, the length of your credit history, the mix of account types and recent applications for credit. Paying on time and keeping balances low usually matter most.
Do inquiries hurt my credit?
When you apply for credit, the lender typically makes a "hard" inquiry, which can lower your score slightly for a short time. Checking your own report is a "soft" inquiry and does not affect your score. Shopping for a single loan type within a short window is typically treated as one inquiry.
How do I fix an error?
Dispute it in writing with the credit bureau and with the company that supplied the information, attaching supporting documents. The bureau generally has to investigate and respond. If the item is wrong, it must be corrected or removed.
Should I worry about identity theft?
Watch for accounts you did not open or inquiries you did not authorize. Consider a fraud alert or credit freeze if you are concerned. A freeze restricts access to your file, and you can lift it when you need to apply for credit.
Can I improve my credit quickly?
Some things help within weeks, such as paying down card balances and correcting errors. Other improvements, like rebuilding after serious problems, take time. Be wary of anyone who promises to erase accurate negative information for a fee.
If you are planning a major loan or business financing, contact our firm so we can help you prepare.
This article is general information, not tax, legal or investment advice for your specific situation.