Jean Chatzky
Do one thing: If you aren’t in the habit of reading your credit reports often, a good rule of thumb is to take a look at them once a month. That way, you can protect against identity theft by catching fraudulent accounts opened in your name before potential unpaid bills fall into collections.
Knowing How to Read Your Credit Report: A Key to Financial Wellness
Every year, millions of people likely view their credit report for the very first time. And if you haven’t taken a look at yours for a while, or ever, there’s no time like the present to download your most recent reports to make sure everything is in order. After all, research shows that more than one in four people find mistakes in their reports, so it’s smart to make sure all of your data is correct.
Where to Get Your Credit Reports
There’s no need to pay for copies of your credit reports. Since the pandemic, the three main credit bureaus have been providing weekly reports at no charge. The quickest way to see them is by downloading the reports.
- To get your free reports, visit AnnualCreditReport.com, which is a site set up by the federal government that provides access to free reports from the three main credit scoring bureaus mentioned above.
- Those who use SavvyMoney also have 24/7 access to a credit report at no charge through their online banking dashboard.
Note: If you don’t regularly read your credit reports, get a copy of all three to make sure they are all free from errors. Not every lender or creditor reports your data to all three agencies, so a mistake could potentially be on one, two, or all three.
When to Check Your Credit Report More Often
You may want to read your credit report more than once a month in these specific scenarios:
- Before major purchases. Check your score well in advance of applying for a mortgage or auto loan to catch any issues you were not expecting.
- While rebuilding credit. Keep a close eye on your data to make sure your score is moving in the right direction. (Many credit card companies provide this type of service for no additional charge.)
- After identity theft. Monitor your reports frequently to verify that any fraudulent damage has been removed. It’s also a good idea to freeze your credit following an issue with identity theft to make sure no one can open more accounts in your name.
How to Read Your Credit Report Categories
Your credit report is basically a summary of your credit history, including whether you pay your debts on time. Here are the main categories and how to read your credit report.
Personal information
This section should contain your name, address, Social Security number, and other personal information about you, including past and present employers. Make sure your address and other details are accurate.
Public Records
If you filed for bankruptcy in the past 10 years, this is where that information would be listed. Included in this public record is the date the petition was filed and the estimated month and year it will be removed.
Credit Accounts (or Tradelines)
This is a list of the credit card accounts and outstanding loans you have. Look at these accounts carefully and make sure they all belong to you.
Payment History
How to read your credit report payment history: This section can also be broken down into subcategories called accounts with adverse information and satisfactory accounts. This section typically includes whether you are current on your payments or if you have fallen behind by 30, 60, 90, 120+ days or more. Charge-offs, foreclosures, and repossessions are also included here.
Credit Inquiries (or Regular Inquiries)
This section shows when companies have accessed your credit report regarding a credit application.
Each business that requests your report should be listed, along with contact information and a date when the report was provided.
Collections
If you owed a debt and did not pay it for 180 days or longer, it would likely show up here. If there are any collections, and you disagree with the data, it’s important to reach out to the collections agency directly and ask for the information to be validated. Doing this will buy you 30 days to deal with the issue.
Reporting Errors
If you find any mistakes when reading your credit report:
- Reach out to the credit bureau directly that reported the errors – big or small.
- Ask for a correction.
- They have 30 days to rectify the situation.
- If the problem isn’t fixed in that time frame, you may have to give them a nudge.
- If another month goes by with no word, you can reach out to the Consumer Financial Protection Bureau (CFPB).
Learn more information on how to dispute credit report errors
Certified financial planner Alvin Carlos, CFA, a managing partner with District Capital Management in Washington, DC, directs his clients to scan for accounts they don’t recognize, because that’s how you can catch fraud or identity theft early. “And if you see a delinquent payment you didn’t make, contest it immediately,’ he says.
You can submit a complaint to the CFPB here: https://www.consumerfinance.gov/complaint/
With reporting by Casandra Andrews.
Chris O'Shea
