Your credit report contains a lot of key information about you. Here are some things to put on your radar.
Whether you are preparing to apply for a mortgage or just want to take stock of your finances, it’s a good idea to check your credit report. You actually have three different reports, one for each of the three major credit bureaus – Experian, Equifax, and TransUnion. Since each bureau compiles information on you, reviewing a different credit report every four months or so is a good way to stay on top of things.
But what should you specifically look for when reading your credit report? Here are some key things to focus on.
1. Bad debts
Falling behind on your financial obligations could seriously hurt your credit score. This is why it is important to look for overdue bills or overdue accounts on your credit report. This way you have the option to challenge or try to correct any negative that you come across. It might be easier than having to worry about recoveries and write-offs.
2. Your credit utilization rate
Your credit utilization ratio measures the amount of available revolving credit you are using at a time. If that ratio goes over 30%, it could start to hurt your credit score, so this is a number you’ll want to pay close attention to. Your credit report will show you what your outstanding credit card balances look like. From there, you can take steps to reduce your usage by paying off existing debt or requesting higher credit card limits.
3. Credit requests
Every time you apply for a credit card or a loan, you will get a serious demand on your credit report. One or two inquiries shouldn’t cause too much damage, but too many inquiries in a short period of time could hurt your credit score.
When you check your credit report, be sure to recognize the source of these requests. If a lender or credit card company took your credit off but you never did, take a look. It could mean that someone has got hold of your personal information and is trying to open an account in your name.
To learn more about applying for credit, read our guide on the difference between hard and soft credit checks.
4. Report errors
Unfortunately, credit report errors are quite common. But correcting them should help you improve your credit score. What mistakes should you look for? First, make sure that your credit report only lists every loan or account you open once. Duplicate ads can increase your credit usage rate and hurt your score in the process.
Also, keep an eye out for new accounts that you never opened in the first place. If you see an account that you don’t recognize, it could be a matter of fraud – or just a basic error on the part of the reporting office.
Finally, make sure that all of the overdue debts listed on your account are indeed overdue. You may have paid off debt years ago, but it was never erased from your credit report.
For more information on how to dispute a reporting error with each office, see our step-by-step guides:
Checking your credit report is one of those important things you should try to do several times a year. And given the number of frauds that have occurred during the pandemic, now is the time to be extra vigilant. The good news is that you can get weekly credit reports for free until April 2022, so there’s no excuse not to take a look at yours.