A credit report or credit history is the record of an individual's creditworthiness. When you apply for a loan or a credit card, financial institutions use information on your credit report to determine if they should make you a loan and at what interest rate. Worse the credit report, higher the chances of loan denial or a higher interest rate.
In the United States, three major credit bureaus that supply this credit report are Equifax, Experian and Transunion. When you apply for a credit card or a loan, the respective financial institution forwards your information to one or all of these credit bureaus in order to determine your creditworthiness.
A lot of people confuse credit reports for credit scores. Both are completely different, though related, and both provided by the above mentioned 3 credit bureaus. More information related to obtaining your free credit score in my upcoming post.
Fair and Accurate Credit Transactions Act(FACTA) was passed in 2003, which required all 3 major credit bureaus to make the respective credit reports available to individuals once every 12 months. Before that, an individual had no access to this information - ?!? I cant have my own credit report? This access was important in order to ascertain what was being reported on the credit reports, was in fact, accurate and to avoid identity theft.
Enter AnnualCreditReport.com. It requires users to enter basic information like name, age and social security number. It then drives you to each individual credit agency's website, where you answer few multiple choice questions to verify your identity and then voila - you have your credit report.
Since each bureau offers one report every 12 months, you can choose to get one every 4 months or all at once. Its upto you. I prefer getting one every 4 months just to keep myself up-to-date round the year.
What does a credit report show?
- Account information
- Various accounts (open and closed) - bank, credit card, loan, mortgage etc.
- Length of each account and average account age
- Detailed Payment history for each account - whether the payment was made on time or late for each month since the account was open
- Potentially negative information - negative accounts, collections, public records
- Inquiries on your credit report - hard and soft. Hard inquiries are visible to a creditor and remains on your account for 2 years. Soft inquiries are only visible to you and do not affect your credit report.
- Personal information - name, SSN, date of birth, residence history
- Employment history
- Summary of your rights under Fair Credit Reporting act
- Information about remedying the effects of identity theft
So what are you waiting for? Get your FREE credit report now.