Banking and Finance

How to Read a Credit Report? | Cheese

July 27, 2021

According to Fortunly, one in five Americans aged 20-29 doesn’t know their credit scores. And, that makes sense, considering that it’s hard to understand what your credit score is if you can’t even read your credit report.

Or, what about accessing your credit report in the first place? Credit score and credit reports can be confusing, but they’re important to understand as they’re crucial to improving your financial health. After all, if you have poor credit, taking a look at your credit report might reveal that there’s been a mistaking in the reporting and you actually don’t owe money to a collections account or don’t have any missed payments.

Here’s what you need to know about how to read a credit report and what to look for when you do so. Understanding the various parts of a credit report will help you stay on top of your credit score and improve it over time.

What is a Credit Report?

It’s important to first understand the differences between a credit report and a credit score. A credit score is a number ranging from 300-850 that depicts a consumer's creditworthiness. Basically, depending on various factors such as previous debt and other financial activity, a credit score is a way to determine whether or not you’re eligible to take out other lines of credit. 

A credit report is a full collection of your financial and personal information. It includes your score, yes, but also a full report of how they calculated your score and the various different accounts and factors they looked at to calculate the score. You can only receive a credit report from a credit reporting bureau, and there are only three: Equifax, TransUnion, and Experian.

How Do I Access My Credit Report?

Interested in accessing your credit report? You’re entitled to one free credit report every 12 months from each of the three major credit reporting bureaus. 

Here is how to request your free Equifax credit report.

Here is how to request your free TransUnion credit report.

Here is how to request your free Experian credit report.

Aside from your full report, however, there are also third-party financial apps that will allow you to check your credit score and perform other financial actions such as track your spending and apply for personal loans.

Float is a great example of a credit checking app as it gives you free access to your credit report, and is the only app that lets you help friends and family keep track of their credit, too. It’s updated once every two weeks after credit reporting agencies update due to any changes. Mint is another great option as it syncs with your accounts to deliver comprehensive snapshots of your real-time budget and spending.

What’s on a Credit Report?

Credit report
Image Source: Experian

To calculate a credit score, all three major credit reporting agencies take a look at various factors. They’ll look at the total amount of debt, repayment history, new lines of credit, length of credit history, and the types of credit you’ve taken out. All of this is available to view on a credit report.

As well, your credit report includes:

  • Rental history
  • Eviction history
  • Employment history
  • Account information
  • Bankruptcy
  • Criminal convictions
  • Payment history (rent, bills, car loans, student loans, etc.)
  • Debt owed
  • Public records
  • Inquiries

Perhaps the most important to take a look at when you’re reviewing your credit report is the account information. This greatly affects your credit score because it’s where you’ll see all information pertaining to the number of accounts you have open (and have had in the past), the payment history for each account, amount owed, age of the accounts, and whether or not any of them are in default or collections.

This makes up about 30-35% of your credit score, so it’s important to check this to make sure it’s accurate. If there are mistakes, you’ll want to immediately contact the creditor or lender and fix it as it could be lowering your credit score.

How to Keep Track of Your Credit Score

Because you’re only able to access your full report once every 12 months, it means that you won’t always be able to see everything that’s on your credit report. For most people, that’s okay. Using a personal finance app like Mint or Float is a great way to keep track of your credit score while also monitoring other changes to your finances.

From balances to bills and credit scores, Mint brings everything together in one place and provides users with a pretty easy-to-use interface that makes navigating your spending easy and, quite honestly, even somewhat fun at times. And, Float is best for those who need help with accountability as it allows you to share your score (or an emoji indicator of the score range) with others.

How to Save More Money

Learning how to read your credit report is one thing, but learning how to save more money in order to pay off credit cards and loans is another issue altogether. You can download apps to help you check your credit, but what about saving more money?

Our Cheese Credit Builder helps you save money and build your credit effortlessly. Make payments each month, keep the money into a Cheese account and watch your credit built month by month. In the end of the term, get you money back and you can use it as an emergency fund, while your credit has already been built! Getting a good credit score can also save your money in the long run by getting your better rates on loans, mortgages and credit cards with better rewards.

Interested in learning more? Sign up today.