Let Me Clarify
Many people overlook the importance of regularly checking your credit report. The key here is understanding the difference between your credit report and your credit score as well as the impact your credit report has on so many financial decisions now or in the future.
Let me clarify.
While most consumers have at least some idea of what their credit score is (in current times, even your credit card company is required to provide it regularly on your statements), it is important to take a step back to review the foundation that sets the stage.
What is a credit report? A credit report is a statement that provides a variety of information regarding your current credit situation, past credit history, status of your current accounts, and other information that can impact your ability to take out loans, rent an apartment, etc.
What exactly is on a credit report? These reports provide:
- Names (and nicknames) associated with your current and past credit accounts
- Current and former addresses associated with you
- Birth date
- Phone numbers
- Current and past employers
- Information about your accounts (ranging from the dates they were opened, the current open/closed status, and limit to the highest past balance, terms, and payment history)
- Public records (including bankruptcies, tax liens, etc.)
- “Hard inquiries” which can affect and stay on your report for at least 2 years
- “Soft inquiries” which are typically made by those who send you promotional offers or review an existing account you have with that lender
Why is this important and what should I look for? In essence, your credit report is who you are in the eyes of credit and lending companies. Aside from the direct relation to your credit “score” (check back soon for more specifics on this!), the major benefit of regularly reviewing this information is to avoid inaccuracies and surprises. It is not all that uncommon to come across situations where information related to a relative or person that shares your name may have found its way onto your report, impacting all the items I mentioned above. This review can also be eye-opening when it serves as a reminder about a student loan or another credit card lingering out there that was forgotten about.
Where can I find my credit report? There are three major credit reporting agencies that provide this information: Experian, TransUnion, and Equifax. By law, everyone is entitled to one free credit report from each agency per year (some companies are offering one per month currently due to financial impacts of COVID-19). Of course, you can sign up for services like Credit Karma or other credit monitoring services for more frequent information, but an easy way to get started is through AnnualCreditReport.com. It may not sound like the most sophisticated website, but it is legitimate and simple to use. All you need is some basic personal information, the ability to verify typical credit report type questions, and then select which of the three agency reports you would like to view.
I encourage individuals to consider running a credit report at least annually. If nothing else, verifying that your information is correct and that the report doesn’t contain anyone else’s information, should give you peace of mind and help avoid any unnecessary surprises from lenders.
As we embark on this clarifying journey together, I encourage you to submit any ideas, topics, or questions to email@example.com.The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. “Let Me Clarify” is a weekly blog containing Chad Baxter’s insights and thoughts about a variety of topics. To learn more about Chad, click here