Conquer Your Credit Report

Understand and review your credit report for proactive financial health.

Most people cringe at the thought of their credit report, but it’s a fact of life—we all have one. Rather than shying away from your credit report, face it head on, manage it, and use it to your advantage. Take charge of your credit report instead of letting it take charge of you. Here’s what you need to know.

Understanding the Credit Report

Your credit report is your lifelong financial record. It lists the following information:

  • Where you live (along with past addresses)
  • Payment history
  • Open accounts (such as credit cards, loans, etc.)
  • Closed accounts
  • Negative financial actions, such as late payments, collections, lawsuits, or bankruptcy

Three credit reporting agencies (CRAs)— Experian, Equifax, and TransUnion—gather, compile, and analyze financial information about individuals in order to help banks, lenders, landlords, and employers determine an individual’s creditworthiness.

Your credit report helps the CRAs assign you a credit score, which in turn helps lenders determine whether or not to lend to you.

The Importance of Your Credit Report

Your credit report will follow you for life. Positive information may remain on your credit report indefinitely. Negative information will remain on your credit report for seven years—10 years for bankruptcies.

Very few things in life are written in stone, but your credit report is. That’s why it’s important to manage it from the outset and avoid letting negative financial information creep onto it.

Checking Your Credit Report

The best way to manage your credit is to check your credit report regularly. Federal law requires each of the three CRAs to provide you with one free copy of your credit report each year. You can’t get this free report directly from them—instead, you’ll need to visit AnnualCreditReport.com, which was created by the government. There, you can order all three credit reports. You can either choose to receive them all at once, or stagger them throughout the year so that you can check your credit more regularly.

Read the reports carefully. In a perfect world, all three of your credit reports should match; however, they often don’t. Highlight any errors you find.

Mistakes on Credit Reports

Mistakes happen. Sometimes you make financial mistakes that follow you for seven years. However, sometimes credit reports contain mistaken information—this could be something as small as a computational error or a transposed digit or as large as false accounts and financial activity indicating identity theft.

This is why it is imperative that you check your credit report regularly. No one else is going to catch those mistakes for you and they could serve to harm your credit and affect your ability to get a job or a loan.

Disputing Your Credit Report

You cannot have accurate negative financial information removed from your credit report; however, you do have the right to dispute incorrect information on your credit report. Write a letter to the CRA and to the company reporting the inaccurate information (such as a credit card company) stating your case. Provide as much supporting information as you can and send the letters through certified mail. Be persistent and continue to follow up until the issue is resolved. Several months after the resolution, check your credit report to ensure the information has been removed. If not, repeat the process.