You know that you should get your credit report each year, but you don’t know how to get one where to start. Credit reports can tend to be long and chock-full of information that appears to be in a different language. What’s weird about me is that helping people with demystifying credit is one of my favorite things to do. Why? Because everyone deserves the opportunity to make a better life for themselves and their families! This article is going to help you break out that report and break down the information so it’s easy to understand.
Where to get your credit report
According to Experian, half of millennials have no idea what their credit score is or whether it is good or bad. A credit report is a detailed history of your credit usage. Each month your credit is being monitored by credit bureaus and all of the information is recorded on your report. A grade or score is assigned to how you’ve dealt with credit in the past on a scale from 300 – 850, with 850 bring the highest. Each year, you can obtain one free credit report from AnnualCreditReport.com from each of the three main credit bureaus.
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Once you’ve downloaded your free credit reports, the first thing you’ll see is your name, previous addresses you’ve lived at, and your social security number. Just note that if you see a name that is definitely not you, it’s a good idea to dispute the information since it may mean identity theft or credit fraud. The same thing goes for common names like Jones, Johnson, James, etc. Even the use of suffixes like jr. or sr. can sometimes get mixed up on your credit report, so always be on the lookout for mistakes.
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The account information on your credit report will be listed by the creditor name. This can sometimes confuse people when looking at their credit report because some lenders use third-party creditors. Sometimes accounts are sold to collection agencies or other lenders. For example, your student loan might be originated by SallieMae now Navient, but then it was sold to Student Loan Depot ( I just made up that name).
Perhaps you are behind on your payments and your medical bill from Smalltown Hospital is now under Clear Consulting Agency (both of these names are made up), which is a debt collection agency. Make sure to always save your bills and take a look at your balances to compare it to your credit report for clarity.
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In this section, you’ll most likely see each month from the year the account was created and any payments that were made. Payment history is recorded by the credit bureaus and you can see how important it is when you take a look at the credit history. Some credit bureaus will show if any payments are late by marking it in red and on time payments are marked in green.
Public records and collections
Late payments are considered “late” 30 days after the due date and remain on your credit history for seven years. Public records show items like bankruptcies or past lawsuits. After seven years, these records should fall off your credit report.
The last item on your credit report will be credit inquiries. There are two types of credit inquiries. Soft inquiries, generally don’t impact your credit score. So if you were going onto credit karma, you should not see a drop in your score. Hard inquiries may impact your credit score because you are actively seeking new credit like auto loans or mortgage pre-approvals. Too many credit inquiries signify you’ve been applying to too many credit lines. so Avoid this or limit inquiries to a short period of time.
Credit reports don’t have to be overwhelming. You can actually learn so much by sitting down and reviewing what is working for your credit score and what isn’t. If you have any questions about credit reports, I’d love to answer them. I’ll do my best to get back to you as quickly as possible. Comment below with your questions!