What's a credit report?

Your credit score changes when companies send updates to credit bureaus about your accounts with them. Your credit report is a detailed record of your history of borrowing money and paying it back—your "report card" about your credit standing. Any time you borrow money—personal loans, auto loans, credit cards—your payment history can become part of your credit report. The reports are used by most lenders when considering whether applicants qualify for home, credit card, car, boat, education and other loans and how much the loan will cost (interest rate and fees).

Who puts together the credit reports?

The credit reports are provided by credit reporting agencies also known as credit bureaus. There are three major national credit bureaus—Equifax, TransUnion and Experian, as well as many smaller regional and local bureaus. Credit bureaus create a credit report based on information creditors send them about their customers. There are slight differences in the information reported to the bureaus, so your report can vary depending on the bureau.

Sections of Your Credit Report

Most credit reports include the following basic information, but each credit bureau may list the information in a different order.

• Personal Information: Your name(s), social security number, birth date, spouse's name, current and previous phone numbers, and current and previous addresses.
• Account Information: For each accounts, the report may list some or all of the following categories, depending on what information creditors have reported. They may be separated into Accounts in Good Standing and Derogatory Accounts (accounts with negative information reported).

• Creditor information: Name of creditor, mailing address, phone number and your account number.
  
  --Status: Open, Closed, Paid, Never Late, In Collections, Charged-Off, etc.
  --Date opened
  --Date of last report
  --Type of account Usually revolving like credit cards or installment like auto loans, or mortgage
  --Responsibility Whether you are an individual account holder, co-signer, authorized user, or other
  --Credit limit or Original loan amount
  --High balance The most you've owed on this account
  --Recent balance The amount you owe now
  --Recent payment The most recent amount reported as paid
  --Late payments Date of missed payments, # of times late, how late payment was (30, 60, 90 days, etc.)
  -- Other Some creditors report a history of your balances or your credit limits

• Public Records Details of public records like bankruptcy, liens, overdue child support or alimony, court actions, etc. These records can remain on your credit report for 7 to 10 years.
• Inquiries or Requests for Information List of businesses who received information from your credit report by the credit reporting agency. "Soft requests" are requests you did not initiate (current creditors reviewing your report or potential creditors looking to send you a pre-qualified offer) and do not harm your credit score. "Hard requests" occur when you apply for credit and these can affect your credit score.

Disputing information on your credit report

When you get your credit report, look at all of the sections closely. Remember that information can remain on your report for seven years or more, so it's important to get errors cleared up as quickly as possible.

If you find any information that you think is wrong:

1) Contact the company or creditor using the contact information on the credit report. After you call them, write a letter (try to keep it to 1 page or less), and send it by certified mail.

• Include your name, account number and an explanation of the information you are disputing.
• Include copies (not originals) of any documents you have to prove your claim.
• Save the receipts, records and copies of everything that you send.
• Contact the credit reporting agency directly, in writing, if the creditor does not respond. Provide copies of all the correspondence you sent to the creditor, and also include your birth date and Social Security number.
• It's also possible to file disputes online at the credit agencies' web sites: http://www.experian.com/,  http://www.equifax.com/  and http://www.transunion.com/.

Credit agencies are not required to change the report, but they will investigate a dispute and, if they decide to correct it, will notify you, usually within 30-45 days. Get another copy of your credit report afterwards to make sure that the error has been fixed.

Find out more about correcting errors on your credit report, including sample dispute letters, at: www.ftc.gov/credit.

Establishing Credit

It is important to have a credit history so that you have proof of your ability to borrow and pay back money. If you've never had a loan or it has been a long time since you had a financial account open, you may not have a credit report or a credit score, making it more difficult to get a loan or a credit card.

One way to establish a credit history is to get and use a credit card. Make sure that your payment history is reported to the credit bureaus.