Credit Report: How to Check It and Understand What It Means?

Credit Report: Your credit report is a really important part of your financial life. It shows lenders how you have handled money that you borrowed before. When you apply for a loan, credit card, or even rent a house, people may look at your credit report to decide if they should trust you with money. If you have a good report, you might get better loan deals or lower interest on your credit card. But if your report doesn’t look good, it might be harder to get approved or you may end up paying more.

What is Credit report?

A credit report is kind of like a school report card, but for money. It shows your old and current credit accounts, how much you owe, if you paid your bills on time, or if you ever had serious money problems like bankruptcy. This report is made and kept by big companies called credit reporting agencies. The main ones are Equifax, Experian, and TransUnion.

How You Can Get and Check Your Credit Report?

You can get your credit report for free once every year from each of the three credit bureaus. The best and safest place to get it is from a website called AnnualCreditReport.com. This site is the only one that the U.S. government says is okay to use. You can also ask for your report over the phone or by mail.

The US government says, “You can order your free annual credit report from each of the three credit reporting companies at the same time, or you can stagger your requests throughout the year.” That means you can either get all three at once or spread them out so you can check more often.

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After the COVID-19 pandemic, these companies started giving out free credit reports every week. They are still doing that even now. This helps people keep a better eye on their credit so they can catch any mistakes or fraud quickly.

One thing is that your free report doesn’t show your credit score. You would have to pay if you want to see the score there. But now many credit cards and money apps let you see your score for free.

How you can Understand What’s in your Credit Report?

Once you get your report, you should look at it closely. It usually has four big parts.

• Personal information: This has your name, address, and some of your Social Security number and jobs you had.
• Credit accounts: It lists all your credit cards, home loans, or personal loans. It tells if you paid your bills on time, what the balance is, and how much credit you were given.
• Public records: This one shows if you had big money problems like a bankruptcy or a tax lien.
• Credit inquiries: It shows who looked at your report. If you applied for a loan, that’s a hard inquiry. If someone checked it for pre-approval, that’s a soft inquiry.

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Lenders look at all this stuff to decide how risky it is to lend you money. Yahoo Finance says, “When you apply for credit, lenders review your report to help decide whether to lend you money, how much to lend you, and at what interest rate.” So your credit report kind of tells your money story to anyone thinking about lending you cash.

Sometimes the credit reports have mistakes. And these mistakes can hurt your score. That’s why it’s very important to read everything carefully. If you see something wrong, you should tell the credit bureau. You can send a letter or use their website to fix the mistake