How to Read a Credit Report

If you do not know how to read a credit report or you do not know your credit score you are not alone. According to a recent study from, more than 30% of Americans have no idea what their credit score is. Being in the dark about your credit history can have serious financial ramifications.  Errors on your credit report can lower your credit score.  You could also be a victim of identity theft and not even realize it. For details on how — and why — you should review your credit report regularly, read on.

A Little Number That’s A Big Deal

Your credit score is more than just a number. “All kinds of decisions are made about you based on your credit score,” says Lisa Gill, an expert in credit scores and reports for Consumer Reports. “Some of them are obvious, like if you apply for a credit card, car loan, mortgage, student loan or personal loan." 

Beyond that, your credit score is used for a number of other things, including getting a company to provide you with utilities, helping a landlord decide whether he or she will rent to you, or whether or not an employer hires you. It can even affect how much you pay for homeowners or car insurance.

Your credit score will range from 300 to 850. The higher the score the better. High scores will give you more access to credit products, and lower interest rates. 

How To Get Your Credit Report

Getting your credit report is easy and free. Got to Note: there are many sites that will try and get you to pay for your credit report. Do not do that! is the only source for free credit reports.  It is authorized by federal law. On the site, you can access reports from three of the largest credit bureaus in the U.S., including Equifax, Experian and Transunion, once per-week, at no cost.

When using this site, you will be asked to do the following:

  1. Fill out a form with your personal information including your Social Security Number.
  2. Select which reports you want. (it’s recommended you get all three: Equifax, Experian or TransUnion)
  3. Answer a few security questions for each credit report. These questions are meant to be difficult, and might require access to your personal records.  If you run into trouble, you can call each of the companies and have the reports mailed to you.
  4. You will then be given access to your reports, and can save or print them to review later.
You’ve Got Your Reports…Now What?

Now that you have your reports, you will need to sit down and take your time reviewing them for accuracy. “Incorrect information can have a negative impact on your credit rating or could be the result of identity theft,” warns Bruce McClary of the National Foundation for Credit Counseling.

As you review your reports, pay special attention to the following:

  1. Make sure your full name and your Social Security Number are correct. Review the addresses listed for accuracy. Not every address you have had needs to be listed. Make sure all addresses make sense in case someone is trying to sign up for a credit card, using your name, and having it sent to their address.
  2. Look at the list of bank accounts and credit cards and make sure everything is correct. Review the list of loans and make sure they are yours. Also, keep an eye out for any mentions of late payments that are not accurate. Gill says, reviewing this section is extra important because “it will be flagged if you’ve missed a payment or you’re one day late outside of that 30-day window”. 
  3. Look to see if there is anything in collections. For example, an old utility bill of $25 or $2,500, from an apartment you lived in 10 years ago can really drag your credit score down. If you see something in collections that you do not recognize, you will be able to view the name of the collections agency and contact them for more information. When you do this, ask for the debt to be “validated.” This will buy you 30 days to sort things out.
What To Do If You Find An Error

Going through your credit report, you might find inaccuracies. For example, it could say you were a day late making a payment, when in actuality, you weren’t. If you find yourself in this position, follow these steps:

  1. Prepare a letter, addressed to the credit bureaus, citing the error and explaining the situation. Make copies of supporting documentation, such as a copy of your checking account statement showing a payment coming out.  Make sure all sensitive information is blacked out. Send the letters and supporting documentation by registered mail. Once they have been delivered, the credit bureaus will have 30 days to respond, although typically they will get back to you in 10.
  2. If they respond and say they are not correcting the error on your report, you can try again. If you get to this point, Gill advises trying to find different evidence and preparing a new letter.
  3. If a second letter and additional supporting documentation does not work, Gill says you can take it to the next level, “your next step is to go to the Consumer Financial Protection Bureau (CFPB), which is a government agency that takes consumer complaints,”  With the CFPB, you can make your complaint online.  The CFPB has 30 days to respond.
  4. If the CFPB cannot resolve the issue, and you still feel you are right, you have the right to sue under federal law. According to Gill, there are a large number of attorneys who specialize in this and the process is not as expensive as you might think. “If you have a legitimate claim and it's ruled in your favor, the company will actually have to cover your legal costs,” she adds.
The Bottom Line

Now that you know how to read a credit report, you should make it a regular part of your financial wellness routine. “Once a month is recommended as a standard practice, mostly because it allows you the opportunity to react quickly to any errors that may appear,” says McClary. “Fast action is critical in situations where someone else is using your personal information to open or access lines of credit.”