Demystify Your Credit Report

Experts recommend that you review your credit report at least once a year. This works out well because the credit bureaus are legally required to provide you with a free report annually.

There are three different credit bureaus that collect financial information about consumers: Experian, Equifax, and TransUnion. Each of these companies reports information to lenders, and it’s important to note that the information contained on one company’s credit report may be different than the information on another company’s report. This is why it’s so important that you check each report regularly for accuracy.

Mark your calendar!

You don’t need to order all three of your reports at the same time. For example, you could order a report from a different credit bureau every four months—staggering your annual review. The key is making sure you regularly complete your review, since a lot can change within a year.

Online–report will be sent immediately

• Go to annualcreditreport.com
• Click the “Request your free credit reports” button
• Fill out the request form
• Select the credit bureau you’d like to order your report from
• Answer the authentication questions to verify your identity
• Security reminder! You’ll need to enter personal information (including your social security number) to verify your identity. To keep your information safe and secure, make sure you type URLs correctly, and never use public computers or public WiFi to send personal information.

Phone–report will be sent within 15 days

• Call 1-877-322-8228
• Follow the automated instructions to verify your identity

Mail–report will be sent within 15 days

• Download the request form: https://www.annualcreditreport.com/manualRequestForm.action
• Print the form and fill it out
• Mail the form to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Even though the specific details contained in each credit report may vary, each will follow a similar structure of information.

Personal information

Your credit reports will include personal information such as:

• Current and former names
• Current and former addresses
• Birthdate
• Social security number
• Phone numbers
• Spouse or co-applicants
• Current and former employers

Checking this section is important because any errors could indicate that someone has stolen your identity or that the credit bureau has you confused with someone else. You’ll want to file a dispute immediately if key personal information is incorrect. 

If your employment information is incorrect (for instance, if old jobs are listed as current) it’s probably not a problem. There may also be misspellings. These issues are not as worrisome as the other errors, but you can still file to have them fixed.

Credit inquiries

Credit inquiries are requests made by outside parties to review your credit report. There are two types of credit inquiries:

• Soft inquiries. Soft inquiries may be made by lenders if they are looking to pre-qualify you for credit, or when you have an existing credit relationship–just enough to check your creditworthiness or financial health. These types of inquiries do not affect your score.
• Hard inquiries.Hard inquiries are made by lenders or outside companies when you apply for credit, employment, insurance, etc. You must authorize the hard inquiry when you apply, and hard inquiries may affect your credit score for a period of time. Certain kinds of hard inquiries—like applying for multiple credit cards in a short amount of time—can have a bigger negative impact on your credit score than, for example, submitting applications to multiple lenders for one auto loan.

Open and closed accounts

Your credit report will list the accounts that your lender has reported to the credit bureau. Each listing will include basic information, including the lender, the type of account, and the account number.

If an account is listed that you didn’t open, contact the credit bureau immediately as this could indicate identity theft.

You should also check the detailed information on accounts, as errors could affect your credit score. It’s important to look for when the account was opened, the account status (open or closed), balances, available credit, and payment history (includes payments that are late and for how long).

Be sure to check your dates! Late payments can only legally remain on your credit report for seven years. If you have any older negative marks, be sure to contact the credit bureau.

Pro Tip: Any negative marks on your spouse’s credit report that were accrued before marriage should not appear on your credit report.

Public records/collections

Your credit report will also list any legal actions taken against you to collect on an outstanding debt. This could include tax liens, wage garnishments, collections, lawsuits, foreclosures, and bankruptcies.

Carefully review this section of your credit report. If any of the above legal actions are noted on your credit report and you are not aware of them, this could indicate identity theft, and you’ll want to contact the credit bureau immediately.

Be on the lookout for multiple collection accounts listed for the same debt, paid debts that are listed as unpaid, and collections accounts listed without original loan dates.

Any legal action taken against you has a serious impact on your credit score and stays on your credit report for at least seven years. Some bankruptcies will remain on your credit report for ten years after the bankruptcy was filed. It’s very important that errors relating to defaulting on a debt are fixed immediately.

The Fair Credit Reporting Bureau Act (FCRA) gives you the right to dispute anything on your credit report. Once you have alerted the credit bureau to the error, they must begin an investigation within 30 days and get back to you with a written response.

Here’s how to handle errors for each section of your report:

Personal information

Contact the credit bureau directly. Some errors can be disputed online, and for other errors you may be required to mail a letter and supporting documentation to the credit bureau.

Debt-related mistakes

If you have debt-related mistakes, start by contacting the lender directly. If you clearly explain the error, they may fix it without protest—especially if you’ve been a good customer. If this happens, they are legally required to alert the credit bureau of the mistake, but you should also file a report with the credit bureau just to be sure the communication was successful.

Public records/collections

For foreclosures, contact the lender listed on the credit report to discuss the error. For liens, wage garnishments, and lawsuits, contact the court where the suit was filed. For collections, contact the collection agency, but be careful—be absolutely certain that the information listed on your credit report is incorrect before calling. If you are responsible for the debt and it still can be legally collected, calling collections may cause the company to reopen your case!

For each of the above-listed situations, contact the credit bureau immediately after communicating with the lender, courts, or collection agency.

Communicating with the credit bureaus

After speaking with lenders, courts, or any other party regarding an error, you’ll also need to file a report with the credit bureau directly.

Here’s how:

• Collect any documentation you can find that supports your claim. This could include bank statements, bills, contracts, legal documents and email correspondence. Make copies of these materials and keep the originals in a safe place.
• Write a letter to the credit bureau that clearly outlines the error and any other steps you’ve taken to fix it (for instance, communication with other parties). The Consumer Financial Protection Bureau offers free templates for drafting letters to the credit bureaus. You can find these at: gov. From the homepage, visit “Consumer Tools” à “Credit Reports and Scores.”
• Send the letter and the copies of your supporting documentation to the credit bureau. Send the materials in a way that can be tracked, such as certified, return receipt requested through the USPS.

Pro Tip: It’s important to keep solid records when communicating with credit bureaus. This includes any verbal communication. Whenever you speak to someone on the phone regarding your claim, record the date, time, person your spoke with and relevant notes about the call.

Then what?

If you receive word from the credit bureau that your credit report will be changed in your favor, you can breathe a sigh of relief, but it’s important to order another copy of your report when the investigation is over to make sure the change has been made (you can request a free copy after a dispute). Because some creditors only submit information quarterly, you’ll then want to order another copy in 3-4 months to confirm that your report is still error-free. This one may not be free, but making sure the error is fixed is worth the cost.

If the credit bureau’s investigation does not return in your favor, you can contact The National Association of Consumer Advocates at www.naca.net for attorneys in your area.