Your credit report contains a lot of key information about you. Here are some items to put on your radar.
Whether you're gearing up to apply for a mortgage or you simply want to give yourself a financial checkup, it's a good idea to check your credit report. You actually have three different reports, one for each of the three major credit bureaus -- Experian, Equifax, and TransUnion. Since each bureau compiles information on you, reviewing a different credit report every four months or so is a good way to stay on top of things.
But what specifically should you be looking for when reading your credit report? Here are a few key items to focus on.
1. Delinquent debts
Falling behind on your financial obligations could hurt your credit score in a very big way. That's why it's important to look out for past due bills or delinquent accounts on your credit report. That way, you have a chance to dispute or try to fix any negative item you come across. This could be easier than having to worry about dealing with collections and charge-offs.
2. Your credit utilization ratio
Your credit utilization ratio measures the amount of available revolving credit you're using at once. If that ratio gets over 30%, it could start to hurt your credit score, so it's a number you'll want to pay close attention to. Your credit report will show you what your outstanding credit card balances look like. From there, you can take steps to shrink your utilization by either paying off existing debt or requesting higher credit card limits.
3. Credit inquiries
Each time you apply for a credit card or loan, you'll get a hard inquiry on your credit report. One or two inquiries shouldn't cause too much damage, but too many inquiries within a short time frame could hurt your credit score.
When you check your credit report, make sure you recognize the source of those inquiries. If a lender or credit card company has pulled your credit but you never applied there, look into it. It could mean that someone has gotten a hold of your personal information and is trying to open an account in your name.
To learn more about credit inquiries, read our guide on the difference between hard and soft credit checks.
4. Reporting errors
Unfortunately, credit report errors are pretty common. But correcting them should help improve your credit score. What errors should you look out for? First, make sure your credit report only lists each loan or open account once. Duplicate listings could drive up your credit utilization ratio and hurt your score in the process.
Also, keep an eye out for new accounts you never opened in the first place. If you see an account you don't recognize, it could be a matter of fraud -- or just a basic error on the part of the reporting bureau.
Finally, make sure any delinquent debts listed on your account are actually past due. It could be the case that you settled a debt years ago, but it somehow never got wiped from your credit report.
For more information on how to dispute a reporting error with each bureau, check out our step-by-step guides:
Checking your credit report is one of those important things you should aim to do a few times a year. And given the amount of fraud that's transpired in the course of the pandemic, now's a good time to be extra vigilant. The good news is that you can get free weekly credit reports until April of 2022. So there's no excuse to avoid giving yours a thorough look.
Alert: highest cash back card we've seen now has 0% intro APR until 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.