Credit Reports: What You Should Know - And Do - About Yours
Your credit report is the record lenders, landlords, insurers and sometimes employers use to judge how you handle money. Most people never look at theirs until something goes wrong. A few minutes of review each year can prevent bigger problems.
What a credit report contains
A report generally lists your identifying information, your credit accounts and payment history, balances and limits, public records such as bankruptcies, and a list of companies that have requested your report. It does not contain your credit score, which is calculated from the report by separate scoring models.
Get your reports
You are entitled to free copies of your reports from each of the nationwide credit bureaus, and the official source is AnnualCreditReport.com, which is the site authorized by federal law. Be wary of look-alike websites that try to sell you services. Details on your rights are available from the Consumer Financial Protection Bureau. You may also be entitled to a free report if you are denied credit, or if you are a victim of identity theft.
What to look for
- Accounts you do not recognize, which could signal identity theft
- Incorrect balances, limits or payment history
- Accounts that should have been closed or paid but show otherwise
- Old negative items that have outlived the time limit for reporting
- Misspelled names, wrong addresses or mixed-in information belonging to someone else
- Inquiries you did not authorize
How to dispute an error
- Write to the credit bureau reporting the error, identify each item and explain why it is wrong.
- Include copies of supporting documents, never your originals.
- Send the letter by certified mail with return receipt, and keep copies.
- Also notify the company that furnished the information.
The bureau must generally investigate within a reasonable period and tell you the outcome. If the item is corrected, ask for an updated report. If the dispute is not resolved in your favor, you can add a brief statement of your side to your file.
Protect yourself
If you suspect identity theft, consider placing a fraud alert or a security freeze on your reports. A freeze restricts access to your file and is available at no charge. Remember that you must lift it temporarily when you apply for new credit.
Build a healthy report
Pay on time, keep credit card balances well below your limits, avoid opening many new accounts at once and keep older accounts in good standing. Positive habits are the most reliable way to improve your standing over time.
If credit problems are affecting your finances, contact our office and we can help you plan next steps.
This article is general information, not tax, legal or investment advice for your specific situation.