Your credit report is an ongoing track record of your financial health. The three major credit bureaus that monitor your credit-related activity and your credit history are Equifax, Experian, and TransUnion. All three use this information to calculate your credit score. Lending professionals use your score as a predictive metric when processing your loan and credit card applications. If approved, a low credit score may impact your rate - costing you more money due to paying a higher interest rate. It can also affect rental and job applications.
If you think this process is out of your control, think again. Federal law allows you to obtain a free copy of your credit report every 12 months - from each credit reporting bureau. Timing is everything. With proper planning, you could get three free credit reports a year. By securing a copy and thoroughly reviewing the information used to determine your three-digit credit score, you will be able to control your credit score better.
How to Get Your Free Credit Report
Downloading a credit score tracking app or enrolling in an online platform can provide reminders and alerts regarding your credit score, but they won't provide you with a copy of your report. The most comprehensive way to address your score is to secure a digital or physical credit report document.
You could request your credit report from each of the three credit bureaus, but there's a better alternative. Instead of visiting the websites of Equifax, Experian, and TransUnion individually, there is an official site that offers a streamlined process. AnnualCreditReport.com is authorized by Federal law to serve as the single source to provide free credit reports from each of the bureaus. In addition to an online request, you can call or submit a written request. Below are three ways to obtain your free annual credit reports from this agency.
- Visit www.annualcreditreport.com and fill out the online form.
- Call (877) 322-8228 and request copies.
- To send a written request by mail, download, complete, and mail the official form to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
The Annual Credit Report website offers the easiest way to obtain a copy of your credit report. The platform is relatively self-explanatory and does not require a credit card or payment information of any kind.
4 Credit Report Sections You Can't Ignore
The sometimes more than 30-page credit report you receive will have a three-digit summary score that may differ from the others. Although Equifax, Experian, and TransUnion use the same system, the information they access may vary as not all lenders and creditors share data with all three agencies. Each agency's credit scoring model may be different. Timing may also play a factor; when the agency pulls and processes the data may result in a different score.
It's not necessary to concern yourself with modestly different scores. But if they are significantly different or uncharacteristically lower than you anticipated, the details in these four sections can tell you why.
It's not necessary to concern yourself with modestly different scores. But if they are significantly different or uncharacteristically lower than you anticipated, the details in these four sections can tell you why.
1: Personal Information Section
Credit report bureaus sometimes make minor errors that can profoundly affect your score. Incorrect addresses, Social Security numbers, birth dates, phone numbers, and work histories rank among the more prevalent mistakes. And don't be surprised if your name is misspelled.
For example, a missing middle initial or incorrect maiden name could result in inaccurate or incomplete data being used to calculate your credit score. Although these and other personal information faux pas are usually harmless errors, some could be due to identity theft.
2: Accounts Section
The Accounts section is considered the meatiest portion of the credit report. This section lists all your financial accounts that are not in collections status. Each listing should come with a summary that includes the account number, date opened, name and address of the creditor, as well as its status.
Along with the type of account, the information tells you whether the credit bureau believes it's in good standing, has a balance due, and when the creditor transferred the information. This section is crucial because errors and late reporting issues can hinder your score in two ways. Negative information can reduce a credit score in terms of repayment history metrics. And the higher balances also affect credit utilization percentages.
3: Negative Information Section
Hopefully, the Negative Information section is relatively brief. This section list accounts that have not met the agreed-upon repayment terms. Items such as collections actions and bankruptcy filings appear in this section. Most negative information remains on your credit report for 7 years, and a Chapter 7 bankruptcy stays for 10 years. Removing that negative information can positively impact your credit score.
4: Inquiries on Your Credit Section
When considering a loan, line of credit, or new credit card, it's important to remember that each application results in an inquiry. Application processors request credit report information to determine your creditworthiness, and these "hard pulls" could hurt your credit score. By contrast, if you ask for a copy of your credit report, it is considered a "soft inquiry" and does not generally affect your score. Further investigation may be warranted if you discover unauthorized or hard inquiries beyond two years. Click here to view the "Power of a Credit Score" video and learn how a "hard pull" for a home loan approval may not hurt you, or contact a Middlesex Federal Home Loan Specialist for an explanation.
What To Do If You Find Errors
Errors, omissions, and unauthorized incidents can negatively affect your ability to borrow at the lowest possible rate. Bad credit scores also impact housing access and job opportunities, which could financially impact your budget. If you discover problems on your credit report, gather supporting documents to prove they are in error. Both the business that supplied the inaccurate data and the credit bureau(s) must correct the misinformation on your report. The dispute process for each credit bureau may differ slightly but typically includes sending a written explanation and copies of the supporting materials to the credit bureaus directly, along with a formal request to correct the error.
Take control of your financial record; order your free credit report to see what lenders, employers, and others see when evaluating your credit history. If past errors or mistakes have damaged your credit score, there are steps you can take. This handout from the Consumer Financial Protection Bureau provides tips on how to raise or fix your credit score. If you have specific questions regarding how your credit score can impact the interest rate you receive on a mortgage loan, contact a Middlesex Federal Home Loan Specialist today.