Personal Credit Report

What's in a Personal Credit Report?

A typical credit report lists:

• All your credit cards, any current credit card debt, and payment history (how often you were late with payments)
• Any mortgages, car loans, student debt and their payment histories
• Any unpaid debt that a creditor reported (e.g. unpaid phone bills, medical bills, etc.)
• Whether you have been through any debt consolidation programs or bankruptcy
• IRS or other tax debt
• Child support payments
• Liens against your property
• How many requests have been filed to see your credit report
• Whether you've disputed any items in your credit report

All of this is calculated into your credit score, which tells lenders how much or little of a loan risk you are. This can make a huge difference in your ability to get a loan and what kind of interest rates lenders will offer you. Even the difference between a 7 percent loan and an 8 percent loan can mean thousands of dollars over the life of a large loan like a mortgage.

Credit Bureaus

Your credit history is kept at the three major credit bureaus:

• Equifax
• Experian
• Trans Union

While the odds are that your personal credit report will be more or less the same with each credit bureau, credit histories are fairly prone to error, and so this is why it's important to check your credit regularly with each one.

Looking for Errors in your Personal Credit History

Many people, according to some reports as many as a third, have errors of some kind on their credit reports. Most of these errors are mere processing errors that can be easily corrected, but in cases of stolen identity or other fraud, these errors can take a tremendous amount of time and energy to correct.

Since so many people have suffered the consequences of mistakes on their credit history, the federal government ordered that all consumers be allowed to order a free credit report each year from the three major bureaus. It's important to do this to find errors as well as to look for old credit card information. Many Americans have credit cards that they used just once or twice in order to get store specials on major purchases, and haven't used since. These unused cards can be open to fraud if somebody finds and uses the account.

When potential creditors look at your credit report, they're considering not only how much debt you have now but how much debt you might be able to get into, and each card's credit limit increases that amount.

Cleaning up your Credit Report

The only real way to clean up a genuinely damaged credit report is to rebuild it. When you do this, you can use credit cards that report monthly to the credit bureaus, since this will add a record of steady payments. Ask other lenders to report regularly to the credit bureaus as well.

Remember that there is no magic fix that will erase a bad credit history. However, if you have evidence of having reestablished good spending habits and your determination to build a strong credit history, you can sometimes get better terms on major loans. Lenders usually look more leniently on a poor personal credit report that's due to medical bills rather than to consumer debt, so point this out if that's your situation.