What information is on a credit report?
Your credit report is essentially a report card that tells potential lenders, insurers, landlords and even employers how well you have managed your credit in the past. It provides valuable insights on how you manage your finances and whether or not you have paid your bills on time.
There are three main credit bureaus that can provide your credit report – Equifax, Experian and TransUnion. These agencies receive information from creditors, usually monthly, about whether you are making loan and credit card payments on time. Your overall credit score, which is a three-digit number ranging from 300 to 850, indicates how likely you are to pay your credit obligations as agreed.
Besides your credit score, your credit report contains other valuable information about you:
It’s important to note, that as long as an account is open, it will remain on your credit report and have an impact on your credit score. Likewise, closed accounts will remain on your report and continue to have an impact on your credit score. If you close an account in good standing, meaning the balance was paid in full and on time, the account will remain on your report for up to 10 years and will likely have a positive impact on your score. If your account was closed in poor standing, meaning you had late or missed payments or your account was sent to collections, the account will remain on your report for up to 7 years and likely have a negative impact on your credit score.
A credit inquiry can be classified as either ‘soft’ or ‘hard.’ A soft inquiry is when you view your credit report or a third party views it for a non-lending purpose. Examples include obtaining your own credit report or getting pre-approved for a credit card or loan. These soft inquiries have no impact on your credit score.
However, each time a third party, such as a lender, insurer, landlord or employer views your credit report for the purpose of extending credit, it is recorded as a hard inquiry on your credit report and can remain there for up to two years.
Having multiple hard inquiries in a short amount of time could negatively impact your credit score because it could mean you have too many new accounts on your report. This is often an indication to a third party that a borrower is having trouble paying bills or could be taking on too much new debt.
A public record comes from government documents and includes bankruptcies, foreclosures lawsuits and unpaid tax liens. A public record with negative information could indicate that a borrower is having difficulty paying their bills. Depending on the public record, they will stay on your credit report for seven to 10 years.
Per the Fair Credit Reporting Act (FCRA), you can order one free copy of your credit report from each of the credit reporting companies (Equifax, Experian and TransUnion) at least once every 12 months. You can request these copies of your credit report each year by visiting annualcreditreport.com. In addition, companies such as Credit Karma and WalletHub allow you to view your credit report anytime and anywhere. Asking for these reports has no impact on your credit score.
Since your credit report is your credit report card, it’s important to view it often to ensure you’re ‘making the grade.’ By doing so, you will know what adjustments you need to make in order to manage or improve your credit score. Plus, if there is any fraudulent activity taking place, you can spot it and report it quickly.
At FNBO, we are committed to helping you achieve your financial goals. One of our personal bankers can sit down with you to help you understand your credit score and provide insights on ways to improve it.Read More Insights