Pulling Back the Curtain On Your Credit Report

  • Discover and correct errors: Credit reporting errors can cause your applications for credit, employment, or housing to be denied unexpectedly and unfairly. If possible, order and review your credit reports at least six months in advance of applying for a major loan to allow enough time to dispute any errors that you might find, and give you time to prepare an explanation for any remaining inaccuracies to a potential creditor.
  • Get a snapshot of how creditors see you: Lenders want to know how you’ll perform as a borrower. Once you’ve identified any weaknesses in your credit file, you can work to resolve them and improve your appeal as a borrower in the eyes of creditors.
  • Become aware of identity theft in its early stages: Most people don’t know they’ve been a victim of identity theft for months or even years after their identity is initially stolen. I was fortunate to discover that my identity was stolen after only 2 months. The sooner you recognize and address identity theft, the sooner you can minimize any damage to your credit and your finances. I keep tabs on my identity (since it was stolen) by monitoring my credit.

What’s in a Credit Report?

Although each of the three credit reporting agencies uses a slightly different format, all credit reports contain the same four main types of information:

  • Identifying data
  • Credit history
  • Credit inquiries
  • Public information
Identifying Data

The identifying information in your report comes primarily from your past credit and loan applications. This section will generally include the following data:

  • Your full name, including any nicknames and suffixes (e.g., Jr., Sr., III) used to apply for credit
  • Your spouse’s name, if you’re married
  • Your Social Security number
  • Your birth date
  • Your current and previous addresses
  • Your current and previous employers
Credit History

The credit history is the most important section of your credit file. It lists every credit account opened in your name. Each listing contains the following information:

  • Name of creditor and account number
  • Type of account (revolving, installment, etc.)
  • Date account was opened
  • Payment history, including late or missed payments and collection referrals
  • Credit limit or original loan amount
  • Current balance due
  • Date of last payment
  • Date information was last reported
  • Number of months information has been reported
  • Authorized users, if any

Note: not all creditors report to all credit bureaus, so it’s possible that some of your accounts will appear on one credit bureau’s report but not on another’s.

Credit Inquiries

The credit inquiries section lists the names of any creditors or others who have reviewed your credit report during the last two years. Only credit inquiries made by prospective creditors or employers, called hard inquiries, are reported to businesses that review your credit file.

Some inquiries that are not reported to businesses will nonetheless appear when you request your own credit reports. These include:

  • Inquiries made by you
  • Inquiries made by creditors for promotional purposes
  • Inquiries made by creditors for account monitoring purposes
Public Information

The public information section includes matters of public record, such as:

  • Bankruptcy filings
  • Foreclosures
  • Lawsuits
  • Court judgments
  • Tax liens

What to Look For in Your Credit Report

The credit reporting industry collects billions of pieces of credit history information every month, so errors and outdated information do occasionally show up. Look over every part of your report carefully and highlight any errors you find. If you find an error in a report from one credit bureau, make sure to check the others for the same error, since you’ll have to correct each error in each report. In particular, look for the following:

In the Identifying Data:
  • Incorrect or misspelled names
  • Other inaccurate identifying information, such as a wrong Social Security number, marital status, birth date, or addresses
  • Outdated or incorrect employment information
In the Credit History:
  • Accounts that are not yours
  • Accounts that are reported more than once
  • Incorrect account histories, such as late or missed payments that you KNOW you paid on time – and you have proof
  • Late payments that are more than seven years old (after seven years they should disappear automatically from your credit report)
In the Credit Inquiries:
  • Credit inquiries that you didn’t initiate
  • Credit inquiries that are more than two years old
In the Public Information:
  • Paid liens or court judgments that are listed as unpaid
  • Accounts that were charged off through bankruptcy but are still shown as past due
  • Paid liens or court judgments that are more than seven years old
  • A bankruptcy that’s more than 10 years old or isn’t listed by its specific chapter
  • Collection accounts or charge offs (other than a bankruptcy) that are more than seven years old
Evidence of Identity Theft

In some cases, a mistake on your credit reports may not be the result of simple human error but is actually a red flag for identity theft. The most common credit report errors stemming from identity theft are:

  • Accounts you didn’t open
  • Unauthorized changes to familiar accounts
  • Authorized account users you didn’t authorize
  • Credit inquiries you didn’t initiate
  • Addresses where you haven’t lived

If you think you may be a victim of identity theft, you must act immediately to protect your finances and your credit. File your complaint with the Federal Trade Commission and with your local police department. You will also need to contact your creditors with information that you may be a victim. The FTC has published a great letter you can send (Identity Theft Victim’s Complaint and Affidavit).

Contacting credit bureaus

Make certain any communications you initiate with the credit bureaus is done via certified mail, return receipt requested. Doing so will allow you to have proof of your communication. Make copies of everything you send for your files.

If you find errors

Send a polite letter to the credit reporting agency outlining the error and requesting that they verify the information you have in your records.

Be patient

Credit reporting agencies get thousands of pieces of mail every day. Give them several weeks to respond to your request for information verification. Credit bureaus will generally respond to you within 30 days. They will contact the creditor in question, asking them to verify the information they reported, then the credit bureau will have to check their records and respond to you. It takes time, but if you haven’t heard anything in a few weeks, be sure and follow up.

Photo by rdodson76