What Is a Credit Report?
Your credit report tells you and potential lenders about your financial health—including your debts and their payment history—and can mean the difference between your loan or credit card application being accepted or declined.
Discover how credit reports represent your finances and how to use your credit report to get the credit you want, stay on top of debt, prevent fraud, and more.
What Is in Your Credit Report?
Your credit report will list your:
- Name, address, and Social Security number
- Credit accounts (such as credit cards and loans), as well as account opening dates, credit limits, balances, and payment history
- Past financial issues, such as bankruptcies
- Recent credit inquiries (which happen when you apply for loans and credit cards)
- Credit score
By listing your credit account information, bankruptcies, and how often your credit has been checked, your credit report shows the state of your finances.
Missed debt payments, a bankruptcy, or frequent credit inquiries within a short time period are red flags for your financial health. On-time debt payments, no bankruptcies, and spaced-out, regular credit inquiries show that your finances are healthy.
Your financial health is tied to your creditworthiness, or your ability to borrow money.
For example, if a lender sees a history of missed payments and a large amount of unpaid debt on your credit report, they will probably determine that you are not a reliable borrower and deny your loan or credit card application.
While credit account information, past financial issues, and recent credit inquiries are important, the most important part of your credit report is your credit score.
What Is My Credit Score?
Your credit score is a three-digit number that sums up your credit report and shows lenders how likely you are to pay back your debt.
Credit scores usually range from 300-850. You will receive a higher credit score if you have a record of paying your debts on time.
If your credit score is high, you will typically receive loans with bigger principals (or the amount loaned) and lower interest rates, because lenders will see your history of repaying credit and determine that you are a reliable borrower.
Interest rates decide how much interest you will pay on your loans based on the principal. This means that having a higher credit score will save you money, because lenders will charge you less interest when you are given credit.
Who Makes Credit Reports?
The main credit bureaus that make credit reports are:
- Experian
- TransUnion
- Equifax
While the credit bureaus will give you similar credit scores, it is not unusual to receive different information from each in your credit reports, because the bureaus have different ways of researching and representing your credit history.
It is important to read your credit report from all three bureaus to become familiar with what is being reported about you.
How Do I Get My Credit Report?
You can get a free copy of your credit report once a year from the three main bureaus by visiting www.annualcreditreport.com. (Credit Union 1 is not associated with AnnualCreditReport.com.)
The three main credit bureaus also offer monthly credit reports on their websites, though these can cost money.
Who Can See My Credit Report?
Your credit report can be pulled by anyone looking to determine your creditworthiness. This often includes:
- Lenders for credit cards or home, auto, and consumer loans to determine your creditworthiness and loan terms
- Landlords to judge your ability to pay rent
- Insurance providers when deciding on your rates
- Employers evaluating your responsibility
- Utility companies seeking reliable customers
- And more.
Why Should I Monitor My Credit Report?
Your credit report will help you keep track of your debt and prevent repayment issues.
Pay attention to who you owe money to, how much you owe, and when payments are due. This will help make sure that you never miss a due date and pay off your loans as soon as possible without issues that will delay repayment.
If you notice unusual activity on your credit report, such as a credit card you do not remember opening or an inaccurate social security number, it could be fraudulent. If you suspect identity theft, consider freezing your credit report.
A frozen credit report is no longer able to be pulled. Since loans and credit cards require credit checks before being opened, this stops fraudsters from opening accounts in your name.
To freeze your credit, you need to contact the credit bureaus individually to notify them of this potential identity theft issue. They will freeze your credit and give you a password to use when you want to unfreeze it.
Finally, your credit report will help you decide if you are ready to apply for the loans or credit cards you want. A high credit score means you will likely qualify for more types of credit and pay less interest for using credit cards or being loaned money. If your credit score is on the lower end, consider taking steps to improve it.
How Can I Improve My Credit Score?
Experian Boost is an easy way to instantly improve your credit. Credit Union 1 is not affiliated with Experian Boost, but it can raise your credit score by getting you credit for bills you already pay, such as your cell phone bill.
Taking out secured loans or secured credit cards will also help your credit score. Secured credit is backed by collateral, a security measure lenders take to protect their loans.
An example of collateral is a mandatory deposit cardholders must make before receiving a credit card.
This collateral protects lenders because, if borrowers fail to repay their credit, they lose their deposit, making it more likely the debt will be repaid.
People with lower credit scores can usually qualify for secured credit, because the collateral lessens the potential risk lenders take by loaning to someone without a large credit history.
Credit Union 1 offers secured credit to help you build your credit history. Credit Union 1 secured loans and secured credit cards can help start your credit journey on the right foot with team members supporting you every step of the way.