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  • Writer's pictureInsight Financial

Understanding Your Credit Report and Score

How much do you know about your credit?

If you haven't checked your credit report or score lately, it may be time to give them a look, especially if you have a major purchase or life change on the horizon. A bad credit report or score could mean you face higher interest rates—or cost you a loan, a job, or an apartment—so it's important to understand what's in your credit report and how to improve your score. Reviewing your credit information is also a good way to identify signs of identity theft.

Your credit report Your credit report contains information about your credit history and the status of your credit accounts, such as how long accounts have been open, balances, whether payments are timely, and whether you've filed for bankruptcy or have been sued.

  • Order a copy of your report. At your request, each of the three nationwide credit reporting agencies—Equifax, Experian, and TransUnion—is required by law to provide you with a free copy of your credit report once every 12 months. The credit reporting companies have set up a central website,, where you can access your credit report immediately. Beware of similar-sounding websites that may be scams or come with strings attached, such as sites that begin charging fees after a free trial period.

  • Review your report. When you receive your credit report, look for charges you didn't make, accounts you didn't open, and any other suspicious information. Unfamiliar information on your report can be a warning sign of identity theft. The Protect Your Identity section of offers guidance for what to do if you suspect someone has used your personal information to open an account or take out a loan in your name.

  • If necessary, correct your report. If you find errors or incomplete information in your credit report, both the credit reporting agency and the information provider (the credit card company or other business that has supplied information about you to the reporting agency) are responsible for correcting them. Dispute the item in question in writing. If an investigation doesn't resolve the situation, you can ask that a statement of the dispute be included in your file and in future reports.

  • Keep in mind that accurate negative information may be there a while. Generally, accurate negative information can stay on your credit report for 7 years, and bankruptcy information can be reported for 10 years. Records of criminal convictions may be reported indefinitely.

Your credit score Your credit score is a figure based on your credit report that allows lenders and others to quickly evaluate your credit risk. Unlike with credit reports, you usually have to pay for your credit score. You may be entitled to your credit score for free if you are denied a loan on the basis of your score.

Ways to boost your credit score. Improving your credit takes time, and there are no easy fixes. Here are some general practices that will set you on the right track:

  • Establish a positive credit history by paying your bills on time; set reminders so you don't miss a payment.

  • Pay off balances.

  • Even if you pay off a balance, consider keeping the account open, as closing it will reduce your credit score in the short term by increasing your balance-to-available-credit ratio.

The value of protecting your credit Besides helping you guard against identity theft, reviewing your credit report on a regular basis allows you to take steps to improve your credit if necessary, ensuring that your score doesn't prevent you from getting a favorable interest rate or securing a new job or housing. Additional information, including how to order your free credit reports by phone or mail, is available on the Federal Trade Commission's website at

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