University of Missouri Extension - East Central Region

Four facts you need to know about your credit report

Suzanne Zemelman Gellman, MS, JD
Family Financial Education Specialist
636-970-3000, ZemelmanS@missouri.edu

Does your credit report say you pay your bills on time or that you are often a month or so late? Does it say your credit cards are maxed out, or that you pay your balances in full every month? Why is it anyone’s business anyway? Who cares?

Well, if you want to live the “American Dream” and be able to buy a house, or start a business, or even buy a car, at least three groups will care about what is in your credit report.

Potential lenders want to know how much debt you have and how you pay your bills.

Potential employers care about how you handle your financial affairs and thus what type of employee you may be, based on the information in your credit report.

Insurance companies care about what is in your credit report so they can assess what kind of risk you are to insure.

It's important to realize the following:

1. Your credit report is your financial management report card.

The report contains basic personal information like your social security number, birth date, and where you live. But, just as important, your report also includes information about money you have borrowed and how well you have repaid it; how you use and pay your credit cards or credit accounts and your debt level; and how well you pay for goods and services that you have been provided, such as rental housing, medical services, and utilities.

Your credit report also includes public information, such as liens or judgments against you. Most negative information can stay on your report for seven years, or 10 years in the case of a bankruptcy. Inquiries, or requests made for your credit information, are also included on your report and stay on your report for two years.

2. The information contained in your credit report is used to create a “credit” score.

This score can range from 300 to 850. According to information on MyFICO.com, the scores of almost 90 percent of the nation fall between 500 and 800. The better your past credit behavior, the higher your score. The higher your score, the less risk you pose to a lender. People with the highest scores get the best interest rates.

A lender who is concerned about your credit score may still extend you credit, but will charge you a higher interest rate to compensate for the added risk. Over time, you can improve your credit score by removing incorrect information and improving your credit behavior--paying bills on time, paying more than the minimum, paying off debts, and showing you can handle credit cards and loans. For more information on how credit scores work, visit www.myfico.com.

3. It’s up to you to make sure the information contained in your report is correct.

If there is wrong information in your report, or you are the victim of identity theft (and may not know it), this information can affect your ability to get credit, how much you pay to borrow money, your ability to get a job, or how much you pay for your insurance.

You can dispute information in your report that you believe is wrong. To find out how, check the Federal Trade Commission's website at www.ftc.gov.

4. Make sure you check your credit reports at least once a year.

Check your report from each of the three major credit bureaus:

Equifax
Experian
Trans Union.

Each credit bureau may contain different reporting information.

Get a free copy of each credit report once a year

As of March 1, 2005, you can get a free copy of your credit report from each of the three bureaus, once every 12 months, as part of a recent amendment to the Fair Credit Reporting Act (FCRA).

For more information


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		University of Missouri Extension St. Louis Area Site maintained by: Roxanne Miller, MillerRT@missouri.edu Last revised: 09/30/09

East Central Missouri Region

Four facts you need to know about your credit report

Get a free copy of each credit report once a year

For more information