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Learning Your Credit Worthiness

A good credit history is the key to unlocking many opportunities in life. Often neglected, until it's too late, it is important to take the time to review, manage and boost your credit score by regularly getting a free credit check and finding any incorrect information or suspicious activity. If you've ever seen a credit report, however, you know that's easier said than done -- at least initially. If you're new, it is recommended to begin by obtaining a free credit report via a free trial service.

The 3 Credit Bureaus

TransUnion, Equifax and Experian are the three credit bureaus operating in the United States. Each bureau collects different information from which a credit score is calculated, so for a complete understanding of your credit health, it's helpful to access each bureau's report and receive free information about your credit score.
Under the Fair Credit Reporting Act (FCRA), consumers are granted access to one free copy of their report from each bureau once a year. Because reports are updated monthly, spreading the requests out over a 12-month period is a great way to keep track of your finances as changes occur throughout the year.

A FICO score, however, is a paid service. If you need a one-time look, you can always sign up for a free trial offer from each of the bureaus. Alternatively, Vantage3, a new credit scoring model developed by the three credit bureaus, can be accessed for free from some credit report websites.

Understanding Your Free Credit Report

A credit score represents your overall credit health, but it's important for consumers to be able to read the report to ensure the information reported is accurate. So what's on the free credit report?

Personal Information
On the first page of the report you'll find your personal information. This includes your full name, social security number, date of birth, address, phone number and employment data. If any of this information is incorrect, contact the credit bureau to have it updated.

Ratings Key
This section explains what the notations on each account means. The ratings are the most important part of the report in terms of understanding your credit health. For example, OK denotes an account in good standing while 30, 90 and 120 signify the amount of days a payment is late. Additional ratings include a COL for collections, C/O for charge off and FC for foreclosure.

Accounts
Next is the breakdown for each account. If you have any accounts not in good standing, i.e. any with past due payments or that went to a collection agency, they usually appear first.

Below each account name is the contact information for the lender, which is helpful for filing disputes. Next there's the account information, which details when the account was created, the account type, such as revolving for a credit card or installment for a loan, the payment terms and status and any remarks on the account. Following this is the month-by-month breakdown, starting on the date the account was opened, listing the balance, scheduled payment, the amount paid or past due and the rating.

Inquiries
This next section lists every business that requested a review of your credit report. This occurs anytime someone runs a credit check on your name. It should be noted that multiple inquires and new lines of credit opened over a short period of time is viewed as a risk by the credit bureaus and can lower your credit score, so limit them.

Consumer Rights
Concluding the report is a section detailing your consumer rights under the FCRA. This section provides vital information for reporting any errors, fraudulent activity or identity theft.