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What's a Credit Report and How Does it Affect Your Life?

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Credit report – you’ve probably heard the term before. But you might be shocked to learn how much it can impact your life.

Along with your credit score, your credit report determines whether you can get approved for loans, of course. It can also affect whether you can rent an apartment, how much you have to pay for insurance, or even whether you can be hired for certain jobs.

In addition, your credit report could determine whether you can sign up for utilities, obtain cable TV or internet service, or get approved for a mobile phone plan.

In short, your credit report (and the accompanying score) is very important, very complex, and maybe even a little bit intimidating.

But don’t worry, because we’ve got you. Below we’ll explain what a credit report is, how you can view your own and — perhaps most important of all — what you can do to affect it.

Knowledge is power

First of all, don’t kick yourself if you don’t know how all this works. A recent survey by Transunion revealed that 31% of Americans have never even checked their own credit report. But the more you know, the better off you’ll be.

What is a credit report?

According to the U.S. Government’s Consumer Financial Protection Agency, a credit report is a statement that has information about your credit activity and current credit situation. The report helps companies decide whether they want to do business with you.

What information is included in a credit report?

A credit report contains lots of highly personal information about your financial history. This includes:

-Your name, social security number, current and past addresses, and some employers
-Your history of paying bills to retail stores, banks, and mortgage companies, as well as amounts borrowed or
credit limits, dates loans were taken out, balances, and past due amounts
-Public records such as liens, court judgments, and bankruptcies
-Credit history inquiries

Your credit score is ultimately determined by the interplay of various factors within your credit report. For more on this, read about what determines a credit score here.

Can I request my own credit report?

Yes. You have the right to request one free copy of your credit report each year from each of the three major consumer reporting companies of Equifax, Experian, and TransUnion.

And you should definitely request that free copy on an annual basis. Here’s why:

  • You want to ensure that your credit report is accurate. Your report could well include information about you that is completely wrong.
  • It could also be out of date. For example, you might have paid off a loan – but this information was never updated. This mistake could drag down your credit score.
  • Your credit report could also reveal fraudulent activity that you did not commit. If you don’t request your report, then you will never know – and your score will suffer needlessly.

To request your free report online, visit AnnualCreditReport.com. Learn more about your rights as a consumer, and how to request your annual credit report here.

What can I do to improve my credit score?

Here are a few ideas:

  • Make sure there are no errors listed in your report, and that it is completely up-to-date. You can dispute any errors you find to ensure your report accurately reflects your credit history.
  • Make payments on time. A strong payment history looks great to anyone who might pull your credit report, plus it’s a way to improve your credit score.
  • Avoid too many “hard” credit inquiries. Each time you apply for a line of credit, whether for a credit card, auto loan, personal loan, or other, a hard credit inquiry is recorded in your report.
  • While some hard checks can be necessary occasionally, too many over a short period could be misinterpreted as a sign of financial trouble – and potentially impact your score.
  • You can always use what’s called a “soft inquiry” to keep up with your credit history and credit score. A soft inquiry is when you check your own score or a company checks it without applying for credit.

Want to learn how to manage your credit and finances? We got you!

Managing your credit and finances can be challenging. As a valued VACU member, you have access to free financial coaching services and a ton of financial education resources to help you live more confidently.

Savings services from VACU can help you prepare for your long-term plans — or an unexpected expense.

  • Related Resources

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  • Free Annual Credit Reports

    The three companies — Equifax, Experian and TransUnion — have set up one central service through which you can order your free annual report. You should not order free credit reports directly from the credit reporting agencies.