Person holding credit card.

Understanding Your Credit Report

A credit report is pretty much like a report card that lenders use to help when making lending decisions. 

Information contained in your report will show lenders how likely you are to pay them back.  This way, they can keep lending decisions fair, because they are looking at only at actual credit activity.  You are not being judged on race, salary, where you live or what you do for a living. 

Credit reports can also be used in non-lending situations such as when applying for a job or searching for an apartment.  In these cases federal law requires that you must give your written permission. 

Let's take a look at the three major credit bureaus, what is contained in a credit report as well as how to dispute inaccurate information.

Just to be clear, the three credit bureaus, Experian, Equifax and Transunion, will only report information that is provided to them by lenders.  They have no control over which creditors report to them and do not participate in lending decisions.  They simply exist to provide information.  Below are links to each bureau’s website

It is recommended that you order a copy of each bureau’s report annually, to check for errors or fraud.  You may request all three bureaus' reports on the same day, or you can break it up over the year.  A good rule to follow is to order one in January, one in June and the third in October.  

Also, if you are planning on making a big purchase such as a car or a home, you should order a copy of your reports at least six months before to make sure you have time to dispute any inaccuracies.  

Here is the link to the government sponsored website that offers the free credit reports from each of the agencies:

When reviewing your report, you will see that it is broken into four major sections:

Identifying information:  This contains your name, former name, aliases, Social Security number, current and/or previous address, among other things.

Trade lines: This section lists the creditors to whom you currently or previously owe money.  It not only has the name of the creditor, but how much you owe, whether you are current, if you have ever paid late and how many times. 

Public Information:  This is where bankruptcies, foreclosures, tax liens, judgments and past due child support is listed.

Inquiries:  This will reveal who is making inquiries about your credit activity.  Inquiries may be hard or soft.  A hard inquiry is when you apply for credit and may impact your credit score.  A soft inquiry is when you pull your own report, when a creditor pulls your report to send you a pre-approved offer or when pulled by a potential employer.

When looking at your credit report, if you do find any errors or inaccuracies, it is important to dispute this information.  The best place to start is on the credit bureau website. 

You will find step by step instructions on how to dispute an item.  It is important that you have facts and proof to back up your dispute.  During the dispute process, the items will not be calculated into your score.  If items are proven to be inaccurate they should remove it from your report.

By doing some background research and review, you can save yourself hours of work, if you have to file a dispute with the credit bureaus.



have learned not to apply for credit cards in malls, etc. due to the fact that they are hard inquiries & work against a better credit score.