Check Your Credit Report (2024)

You hear all about credit reports, but what actually are they? Click through to find out how to access them and how to read them.

What's the Payoff?

Better credit, which means lower interest rates on loans, favorable credit card terms and more money in your pocket.

Why You Shouldn't It

Because mistakes on your reports can lower your score, so when you apply for an auto loan or a mortgage—surprise!—you may be turned down. No one wants that.

We all talk about our credit "report," but in fact there are three, and they come from the main credit bureaus: Equifax, TransUnion and Experian. These documents look different, but they're made up of the same basic info: your job history and past addresses, credit card accounts, loans, whether you make payments on time, tax liens, even (sigh, yes) library late fees and unpaid parking tickets. All that data goes into figuring out your credit score, which lenders look at when evaluating whether you're a good credit risk.

Try This: Visit AnnualCreditReport.com and download all three reports. It's fast and easy. This official site was set up under the Fair and Accurate Credit Transactions Act and entitles you to your reports at no charge once a year. (FreeCreditReport.com, despite those funny ads with the singing slacker guy, charges you a fee if you want your reports immediately.)

The free reports do not come with your actual credit score, however, and each might show a slightly different number. The one lenders often see is the standard FICO score. If you're curious, you can buy it starting at $20 at MyFico.com.

Poor credit behavior—late payments, defaults, maxing out on your cards—pulls down your score. But errors can also play a role: One study found that 25% of all reports contain major glitches that can affect your score negatively, costing you money. Serious mistakes include accounts that are incorrectly marked "delinquent," and credit card accounts and background information on the report that do not belong to you.

Try This: First, look through the list of accounts on your reports. These go back many years, so make sure you're familiar with the status of each card and loan—whether it's open or closed, if you owe money and how much, and if you have any accounts that are delinquent or in default.

If you find an error, follow the instructions on the credit report for disputing it. Each of the three companies has a different process for reporting mistakes, but all allow you to state which items are wrong, and why. Simply informing the bureau about an error is rarely enough to get it fixed—you may have to write a letter to the bank or organization that made the mistake. (Check out this article for the best ways to make sure errors get corrected: womansday.com/creditreport)

In many states, once you dispute an error, you're entitled to another free report to make sure it has been fixed—so be sure to follow up.

Unless you're 100% on top of things, you may see a late payment, an unpaid bill or some other "oops" moment on these reports. Those black marks are not pretty, but knowing where you've slipped up helps you focus on the habits you need to improve.

So what goes into having good credit and a high score? Paying on time is important—it comprises 35% of your score. Your credit utilization ratio (money-speak for how much of your available credit you've used)is another 30%. Ideally, you don't want to carry big balances for a long period of time. Aim to use 20% or less of the credit available to you, and no more than 20% on each card. (If you have a $10,000 limit on a card, don't carry more than $2,000 of debt.) The length of your credit history and a few other factors make up the last 35%.

Try This: How you clean up your credit depends on what went wrong. If you see a pattern of late payments, set alerts on your calendar so you don't miss your deadlines. Too much debt on any one card? Pay it down as quickly as you can. Lastly, chip away at all your debt and keep balances low. Staying on top of these things will give your score a hefty boost, which will save you money.

In the course of refinancing their mortgage, Kirsten Hines and her husband, John, of Yardley, PA, asked for their credit scores—and made a surprising discovery.

"Even though we pay and file everything jointly, I found that John's score was much lower than mine. I ordered our reports from Experian, and his listed debts and unpaid bills that we knew weren't his. They belonged to another John Hines! After telling Experian that we'd never lived in the city where the debt originated, the bad credit vanished. We learned that with common names, mix-ups can be avoided by using a middle initial. Now my husband's credit score is about 400 points higher!"

MP Dunleavey writes monthly in WD about easy moves you can make to improve your finances.

“Check Your Credit Report” is part 3 of a multipart yearlong series.