How to Read a Credit Report and Spot Errors

A credit report is a record of how you have borrowed and repaid money, compiled by a credit reporting company from information that lenders and others send in. Lenders, landlords, insurers and some employers may consult it. Knowing how to read a credit report lets you confirm that the details are accurate, spot signs of identity theft and understand what drives your credit scores.

In brief

• Three nationwide consumer reporting companies, Equifax, Experian and TransUnion, maintain most credit reports.
• A report contains identifying information, account histories, public records and collections, and a list of inquiries.
• Your credit score is calculated from the report but is not the same thing.
• You are entitled to free copies of your reports through the official site, AnnualCreditReport.com.
• You can dispute inaccurate information with both the reporting company and the business that supplied it.

What a credit report is, and what it is not

The Fair Credit Reporting Act (FCRA) is the federal law that governs consumer reports. It sets standards for accuracy, limits who can view your report and gives you rights to see and dispute the information. The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) enforce and explain these rights.

A credit report is a file of facts, not a judgment. It does not state whether you are a good or poor risk. Credit scores, which lenders often use, are produced by formulas that analyze the data in the report. Different scoring models exist, and your score can vary depending on which report and which model is used. Your report also does not contain your bank balances, savings or income, and it does not record your race, religion, national origin or marital status.

The main sections of a report

Layouts differ by company, but most reports follow the same pattern.

Personal information

This section lists your name, current and past addresses, date of birth, and often a partial Social Security number and employer information. Check it carefully. Addresses you do not recognize or a name variation that is not yours can signal a mixed file or identity theft.

Accounts, also called trade lines

This is the longest section. Each entry shows a lender or creditor, the type of account (credit card, auto loan, mortgage, student loan), the date opened, the credit limit or original loan amount, the current balance, the payment status and a month-by-month payment history. Look for:

• Accounts you do not recognize.
• Late payments that you made on time.
• Balances or limits that look wrong.
• Closed accounts still listed as open, or accounts you paid off listed as unpaid.
• Duplicate entries for the same debt.

Payment history is usually the most heavily weighted factor in the scoring models, so errors there can have a large effect.

Collections and public records

Debts sent to collection agencies appear here. Certain public records, such as bankruptcies, can appear for a limited number of years. Which public records are reported has changed over time, so check the CFPB for the current practice. A paid collection or one beyond the allowed reporting period should not keep appearing indefinitely.

Inquiries

Inquiries show who has accessed your report. There are two kinds:

• Hard inquiries occur when you apply for credit and a lender checks your report. They can have a small, temporary effect on scores.
• Soft inquiries occur when you check your own report, when a lender makes a pre-approved offer or when an existing creditor reviews your account. They do not affect scores.

Unfamiliar hard inquiries can indicate that someone applied for credit in your name.

How long information stays

The FCRA limits how long negative information can be reported. As a general matter, most negative items are removed after several years, and bankruptcies can remain longer, depending on type. Positive accounts in good standing can stay on a report for a long time. The CFPB and FTC list the exact periods on their websites. Because these time limits are set in law, confirm the figure for your item with the agency rather than relying on a rule of thumb.

How to get your reports

The only source authorized by federal law for free credit reports is AnnualCreditReport.com, which is run jointly by the three nationwide reporting companies. Through that site you can request reports from each company. The site states how often you may request free copies, and that schedule has changed over time, so read the current terms there and on the FTC page.

Be careful with look-alike websites and offers that require a subscription or a credit card number to see a “free” report. If a site asks for payment information for the free report, you are probably not on the official one.

You can also get a free report if you were denied credit or insurance based on a report, if you are unemployed and seeking work, if you receive public assistance, or if you suspect fraud. Lenders must tell you which company supplied the report that was used.

Specialty reporting companies cover things like tenant screening, check-writing history and insurance claims. You can request those reports too, and the CFPB maintains a list of such companies.

A walk-through: reviewing your report in six steps

1. Pull all three reports. The three companies may not hold identical data, because not every lender reports to all of them.
2. Verify your identifying details. Names, addresses and employers should match your history.
3. Match every account to your records. Compare listed credit limits, balances and dates with your statements.
4. Check payment history. Compare any late marks with your bank records.
5. Review inquiries. Each hard inquiry should correspond to an application you made.
6. Note anything wrong. Write down the company, account number, the error and the proof you have, such as statements or letters.

Disputing an error

If you find inaccurate or incomplete information, the FCRA lets you dispute it. The usual process:

1. Contact the reporting company in writing, online or by mail, explaining what is wrong and attaching copies of supporting documents. Keep the originals.
2. Contact the business that supplied the data, known as the furnisher, with the same explanation. The furnisher has its own duty to investigate and correct.
3. Wait for the investigation. The reporting company must generally investigate and reply within the time the law specifies, which the FTC page states.
4. Review the result. If the item is corrected, you should receive an updated report. If the dispute is rejected, you can ask that a statement of dispute be added to your file.
5. Escalate if necessary. You can file a complaint with the CFPB at consumerfinance.gov/complaint or with the FTC, and in some cases consult a consumer attorney.

Sample dispute letters are available from the FTC and the CFPB. Keep copies of everything you send, and use certified mail if you mail documents.

If you suspect identity theft

Fraud shows up as accounts you never opened, inquiries you did not authorize or addresses you have never used. Go to IdentityTheft.gov, the FTC’s site, for a recovery plan and a way to report. You can place an initial fraud alert with one reporting company, which must tell the other two, and you can freeze your credit for free. A freeze blocks most new creditors from viewing your report, which makes it difficult for thieves to open accounts in your name. You can lift it temporarily when you apply for credit yourself.

Common misconceptions

“Checking my own report hurts my score.” Checking your own report is a soft inquiry and does not affect scores.

“My credit report and credit score are the same.” The score is a calculation based on the report.

“There is one report.” Each reporting company keeps its own file, and the contents can differ.

“Paying a repair company is the only way to fix errors.” You can dispute inaccuracies yourself at no cost, and the CFPB and FTC provide guidance on doing so.

“Closing an old account erases its history.” Closed accounts in good standing generally remain on your report for years.

FAQ

How often should I check my credit reports?

Many consumer agencies suggest reviewing them at least once a year, and more often before a major loan application or after a data breach. AnnualCreditReport.com states how frequently you can request free copies.

Does a dispute affect my credit score?

Filing a dispute does not by itself lower a score. If an error is corrected, the score may change as a result.

What if the reporting company says the information is accurate?

You can add a consumer statement to your file, send additional evidence, contact the furnisher directly, and file a complaint with the CFPB.

Who can see my credit report?

Only people with a permissible purpose under the FCRA, such as a lender evaluating an application, an insurer, a landlord or an employer with your written permission.

Is a credit freeze better than a fraud alert?

They do different things. A freeze restricts access to your report, while an alert asks creditors to take extra steps to verify your identity. The FTC explains both.

Does my credit report show my credit score?

Not always. Many reports do not include a score, and scores are often sold separately or provided by lenders and card issuers.