Adulting, Step 1: Check Your Credit Report

Editor’s Note: Keeping up with all the demands of being an adult in today’s world can be draining. It seems like every little decision takes weeks of research to understand the multitudes of options. We all get overwhelmed with the details at times, but you don’t want to lose track of the details when managing your personal finances. So today, we’re introducing the first in a regular series of posts from our Financial Wellness team. They’ll be providing basic information on some of the most important aspects of personal financial management. We considered calling this series, “Adulting is hard, y’all!”, but we’re nothing if not professional. So look for a post from our “Money Management Guide” every month. And if you have a finance-related question, please send it to us so that we can respond in an upcoming post!

What’s A Credit Report?

Credit reports provide detailed information about your credit history. These reports are not the same as credit scores, which only offer a summary of your credit history.

Why Are Credit Reports Important?

Credit reports can affect the most important aspects of your life. Potential creditors, such as banks, will review a credit report to determine whether to approve you for a credit card or loan. If you need to rent an apartment or house, the landlord will run a credit check before offering you a lease. And some employers may check your credit report before hiring you. 

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Your credit report can determine whether you get the mortgage for your first or next home.

What Kind of Information Does A Credit Report Include? 

The statement contains four major components: personal profile, accounts summary, public records, and inquiries.

The personal profile contains basic information about you: your name (including names you may have used in the past), your current and previous addresses, and personal information, such as your birthdate.

The accounts summary will include information on your credit cards, auto and home loans, bank loans, and any other accounts, like utilities bills, if reported to the credit bureau. This section may be divided into accounts in good standing and potentially negative accounts. The summary contains information such as when the account was open, its current balance and credit limit, the type of account, and payment history.

Public records include certain types of legal action taken against you, such as bankruptcies, tax liens, and civil judgements.

Inquiries are when another company is seeking information from the credit bureau about your credit report. Inquiries are either hard or soft. A hard inquiry occurs when you take action such as filling out a loan application. Soft inquires occur when companies seek information such as pre-approved credit card offers.

Get Your Free Credit Report

Get copies of your free credit report at www.annualcreditreport.com. Credit reports should be reviewed annually from each of the three major credit bureaus: Equifax, Experian, and TransUnion. For more information about credit reports visit the Consumer Financial Protection Bureau (CFPB) website.

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