Learn how to access, interpret, and use your credit report.
Your credit report tells potential lenders how responsible you’ve been with credit in the past. Lenders can legally request this document to assess how risky it is to lend to you.
What can lenders see?
Your credit score is a number that represents your creditworthiness. Scores can also be referred to as credit ratings, and sometimes as FICO scores, ranging from 300 to 850.
Your credit history lists the details of your past and current credit accounts. It also documents each time you or a lender requests your credit report, as well as instances where your accounts have been passed on to a collection agency. Financial issues that are part of the public record, such as judgments, liens, bankruptcies, and foreclosures, are also included.
What does a credit score mean?
A credit score is a numeric representation of your credit history. It is comprised of these components:
- Payment history
- Amounts owed
- Length of credit history
- How many types of credit in use
- Account inquiries
Generally, the higher your credit score, the lower your risk may be to the lender.
How to access your report
You can request a free copy of your credit report from each of three major credit reporting agencies – Equifax, Experian, and TransUnion. You’re also entitled to see your credit report within 60 days of being denied credit, or if you are on welfare, unemployed, or your report is inaccurate.
It’s smart to request a credit report from each of the three credit reporting agencies and to review them carefully, as each one may contain inconsistent information or inaccuracies. If you spot an error, request a dispute form from the agency within 30 days of receiving your report.
5 ways to improve your credit score
- Get copies of your credit report then make sure information is correct.
- Pay your bills on time.
- One of the most important things you can do to improve your credit score is pay your bills by the due date.
- Understand how your credit score is determined
- Your score is usually based on the answers to these questions:
- Do you pay your bills on time?
- What is your outstanding debt?
- How long is your credit history?
- Have you applied for a new credit recently?
- How many and what types of accounts do you have?
- Learn the legal steps to take to improve your credit report.
- Beware of credit-repair scams.
- Sometimes doing it yourself is the best way to repair your credit.
Responsibility is key
Above all, it’s important to use credit responsibly. A good credit history and credit score can be the difference between being able to purchase a home, buy a car, or pay for college. Proactively managing your credit report is a great way to stay in control of your finances, and ultimately achieve your goals.