How to Read Your Credit Report

Most of us have some sense that our credit score is important, as it’ll come up in discussions as wide-reaching as purchasing cars or homes, opening a new credit card, or sometimes even applying for housing or jobs! But did you know that there’s a whole lot more to your credit than just a score? 

A credit score isn’t just a mysterious number that gets thrown around every time you want to open a new line of credit; it’s the encapsulation of everything in your credit report. You may know about credit reports from financial literacy classes, bank advice, or–for more of us than we may be willing to admit–just some annoyingly catchy commercial jingles. But do you know how to find it and (more importantly) how to read it? If not, read on–because understanding your credit report can be hugely impactful on your credit score and your overall financial well-being.

How to get your credit report

Before you can read your credit report, you have to get it–and that’s a process that’s simultaneously a bit confusing and far easier than many people think.

The first thing you need to know is that your credit is reported to three credit reporting bureaus: TransUnion, Experian, and Equifax, and you can get a report from each bureau once per year. While the three bureaus are independent and therefore may contain slight differences, your reported info should be largely the same between the three (if they aren’t, you’ll be able to tell–and fix–these discrepancies by learning to read your report thoroughly). 

You can file to get a free report from each bureau using the government-affiliated website AnnualCreditReport.com, which will quickly and easily allow you to read your reports by filling out a few simple questions. If you’re looking to make a major upcoming purchase and you want to ensure your credit reports are flawless, you may want to request all three at once. Otherwise, it can be beneficial to spread out each request over the course of each year so that you can effectively monitor your credit every few months instead!

Now that you have your report(s); here’s how you go about reading them:

Personal Information

Personal information is exactly what it sounds like–info about you, like your legal name, addresses (both current and former), known phone numbers, and more. While it’s easy to gloss over such a straightforward section, it’s important to check it thoroughly to make sure it’s right. 

The biggest potential error you’ll want to look for is mistaken identity–someone with the same name, a shared prior address, or even your spouse or children may accidentally show up on your report, and the last thing you want is for your credit score to be inadvertently affected by someone else’s behavior.

Employer History

Employer history should be a rundown of all known jobs you’ve held over the reported years, and sometimes it gets lumped in with personal information. While your employment history doesn’t directly impact your credit score, you’ll still want to verify that this section is correct and complete. 

If you see jobs you never held or don’t recognize, it could be a sign that your report is being confused with someone else’s, which could mean additional errors that can be unfairly held against you should you need a credit check.

Credit History

Credit history is (for most people) the largest section of their credit report, and for almost everybody it’ll be far and away the most important. When people think of “credit report,” this is the section they’re likely thinking of–it details your history of credit and debts, including lenders, credit line status (open or closed), whether the line of credit is in good standing or delinquent, and payment history. 

You’ll want to scrutinize this section carefully, as these are all factors that really affect your score. Does your report show missed or late payments you know you made on time? Does it show open accounts you know are closed, or even accounts that you don’t recognize or don’t belong to you? All these things can deeply impact your score, and when looking at your report, you have the opportunity to dispute any errors–and please take this opportunity, for your own benefit!

Public Records

If you have bankruptcies, repossessions, foreclosures, or other similar debt-related records in your past, this is where they’ll show up on your credit report. Obviously you’ll want to check for errors in this section, but the main thing to focus on here is just seeing what’s still on your report and what’s fallen off, as different records have different reporting lifespans (typically 7 years, but in the case of Chapter 7 bankruptcy, it’ll show on your report for 10 years).

This is an important section to read closely, as these are often seen by lenders as signs of delinquency and can drastically impact your ability to get new loans, lines of credit, or even housing. Even if you can’t get these removed, knowing it inside and out will allow you to write credit report explanations that can help detail circumstances and provide context that lenders can use to help you get the services you need.

Credit Inquiries

Whenever someone checks your credit, the inquiry will show up here on your credit report. If you check it yourself (checking your score via an app, pulling your annual credit report, etc), you’ll see a soft inquiry, which is usually harmless–it won’t negatively impact your score. 

However, if an outside party like a lender or landlord pulls your credit, that can show up as a hard inquiry, and these do typically drop your score by a few points–the logic is that if you’re seeing several hard credit pulls, lenders may wonder why you need so much credit or need to take on debt, making them more cautious.

The good news is that the credit scoring algorithms understand that sometimes, we’ll need several hard credit pulls in a short period of time–particularly when we’re shopping for the best rates. So there is a built-in grace period where if you have multiple hard pulls for the same type of loan (say, a car or home loan) within a certain period of time, it only counts once against your score.

Spotloan: A Smarter Way to Borrow

Learning to read your credit report is a fantastic step towards building up your credit score–at minimum, it gives you the knowledge of what’s influencing your score and how you can change it, and at maximum, it can even allow you to fix errors for an immediate boost to your score.

But sometimes, the slow-and-steady process of building your credit score is at odds with the money we need right now. At Spotloan, our simple online application process can help you qualify for the money you need, even if you have bad credit or need a loan quickly. All you have to do is go fill out our application to see if you qualify, and you could receive a decision within minutes. Fill out our application now!