What is a Credit Report?

Most people don’t think about their credit score, history or report until it comes time to make a major purchase, such as a home, car or appliance. If you’ve ever been turned down due to bad credit, you may have wondered how to check your credit as well as how to improve it. Credit history factors heavily into whether or not you will be accepted for a home, car, business or other loan, and it plays a part in the interest rates a bank, dealership or retail chain will charge. Your credit history is quantified by a number known as your credit score. Higher scores make moving through the financial world easier, while lower scores make it more difficult.

Several companies can provide a credit report, or detailed examination of your credit history, along with your credit score. The three most-used companies, or credit bureaus, in the United States are Experian, Equifax and TransUnion. Simply pay, sign up for a free offer and you can access your credit report instantly over the Internet.

How Do I Get a Credit Report?

The process of obtaining a credit report is easy. Simply visit the website of one of the credit bureaus or type “free credit report” in to your favorite search engine and look for the most prominent button. Likely labeled “Get your credit report!” or something similar, all you have to do is click it and enter your personal data such as your name, age, social security number, address, etc. The website will take your information and give you your credit report.

What Is Contained in my Credit Report?

Your credit report contains a history of all your dealings with credit, loans and debt over your entire life. It consists of a comprehensive, searchable list of all these debts, with any missed payments, deferments or other status changes marked when they happened. Additionally, your credit report contains a list of everyone who has ever checked your credit, such as employers, loan providers or insurance companies.

Some reports also provide your score, which gives you your overall credit-worthiness in a single number. While this is helpful at a glance, you can generally determine where your credit score lies by looking at your report data. This is useful, as many credit report sites require an additional payment in order to look at your actual score, but may give you a free basic report. The rule of thumb for credit score is:

* 1/3 determined by paying all your debts and bills on time
* 1/3 determined by your debt-to-credit ratio, also known as how much you owe versus how much you can get – incidentally, you can easily raise your credit score by increasing the credit limit on your cards to decrease the debt-to-credit ratio
* 1/3 determined by other factors, such as length of credit history and variety of credit types

All of these can be found in any credit report. You should also be aware that U.S. law requires the three major credit bureaus to provide every citizen with a free annual credit report. This free credit report is often quite basic and doesn’t include your score, but use the rule of thumb with the information on the report and you should be able to figure out where you stand in the eyes of lenders, employers and insurance providers.

What is the Difference between the Three Credit Bureaus?

Many people wonder why there are three different bureaus when they essentially provide the same credit reporting. The truth is that there isn’t much difference between them. Each credit bureau calculates your creditworthiness slightly differently, but all are generally within ten points of one another. The main difference is that each offers a different level of service as well as a different set of paid options, such as monthly expanded credit reports or emails whenever your credit score changes. These typically cost between $10 and $30 per month. If you are concerned about keeping track of your credit on a monthly or weekly basis, you may want to look in to the difference between Equifax, Experian and Transunion; otherwise, they are all basically the same.

What to Watch Out For

You should always be wary of credit bureaus that take your credit card information when you don’t want to, even if you’re just getting a free trial or free report. It is often quite difficult to figure out what you pay for and what you don’t, and many credit bureau websites have buttons that look innocent but charge your card in exchange for an extensive credit report when you may have just wanted a free basic one. Other sites may make it difficult to cancel your free trial before your card is charged once you’ve signed up.

What to Do Once You’ve Seen your Credit Report

Most people are interested in their credit report or credit score because they want to know if they are able to get a loan. Some people may do so as a first step toward fixing their credit. Still others are simply curious about their credit history and want to see what it’s all about.

Financial awareness is always a good thing, and looking at your credit report annually is a great way to stay apprised of your financial health. If you’ve never looked at your credit report, you should take a glance. Some people find credit cards they forgot they had or debts from years ago that continue to damage their financial standing. You should consult with experts or make a plan of action in order to improve your creditworthiness if you find anything unsatisfactory in your report. You never know when you might want a home, auto, business, medical or other sort of loan.

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