Things to Watch Out for When Looking at Your Credit Report

By Benjamin Feldman, Content Strategist, ReadyForZero

Everyone knows that credit scores are important. They determine what interest rates you’ll be charged on loans and credit cards, and for that reason a higher credit score could save you hundreds or even thousands of dollars in interest charges. But how do you really know what is going on “behind the scenes” with your credit score?


If you’ve been reading this blog, then you probably already know that anyone can see their own credit report for free at Federal law allows each of us to view and download a copy of our reports once a year from each of the three major credit bureaus (Experian, Equifax, and TransUnion). You can either download all three at once or space them out throughout the year. 

Then comes the important question: once you’ve got your credit report in front of you and you’re staring at it, what exactly should you be looking for?

The Inner Workings of a Credit Report 

First, you should know that the credit report is divided up into several different sections. At the top there is general information about you, such as your name, address, birth date, and social security number. This information is delivered to the credit bureaus by the lenders and is used to track your credit activity. While this may seem invasive (and in some ways, it is) you might feel a little better to know that the credit bureaus go to great lengths to keep this information secure. However, that doesn’t always mean the information is accurate (see below).

Lower down on your credit report, you will see a list of all your credit accounts - past and present. This is the most important part of the report. Often, your accounts will be separated into accounts that are “satisfactory” and accounts that are “adverse.” The adverse accounts are the ones that are potentially negative. These might include debts that have been sold to collections agencies or accounts that are simply past due. The satisfactory accounts, as the name suggests, are the ones in good standing. 

Another section on your credit report may show public records, such as a court judgment against you for an unpaid debt, or a bankruptcy. If you have no court records related to debt, then this section will be blank. 

A final section on your report will show “inquiries,” which may also be labeled “credit history requests.” This section will show any recent credit checks, such as if you applied for a mortgage or a car loan and your prospective lender ran a credit inquiry to decide whether to give you the loan. For more on how credit scores work, see this resources page

Next: Look Out for Errors or Problems 

Once you’ve scanned your credit report to quickly get a sense of what’s on it, then you should start looking more closely to see if there are any errors or problems that you need to address. An error on your credit report can cause you financial damage for no reason, and unfortunately such errors are more common than we’d like. 

First, review your personal information and make sure it is all correct. If an address or phone number is listed that you’ve never seen before, that could lead to problems and you’ll need to address it. Occasionally, credit files from two different people get mixed up together (which is more likely when you have a very common name) and you might have someone else’s information and credit history listed on your account! 

Next, look for any accounts that you don’t recognize - particularly adverse accounts. For example, if there is an account from Chase Bank listed with a late payment or unpaid amount but you know for sure that you’ve never had an account with that company, then you’ll need to correct that error. Or if a debt collection agency you’ve never heard of is listed with an unpaid balance that doesn’t look familiar, that’s also something you’ll need to fix.

Finally, look at the accounts you do recognize and make sure that your payments have been recorded properly. It would be a shame to get dinged because your lender failed to properly report payments. The credit report will list any late payments very clearly, so you can double check to make sure that none have been reported inaccurately. 

Fix The Problems! 

If you find any errors on your report, then you’ll need to work on fixing them. This process can be a bit frustrating, but you can start by contacting the credit bureau(s) where the errors appear. This great article from the Federal Trade Commission explains the exact steps in order to get errors removed from your report. Basically, you’ll need to contact the credit bureau individually and request the information be changed/updated. Then you’ll need to wait and check your report to make sure it was corrected. 

On the other hand, if you have real problems on your credit report that are the result of unpaid debts, then you’ll have to take a more long-term approach to fixing them. For example, if you have unpaid accounts weighing down your score, you may want to try to get in touch with whoever owns that debt (though keep in mind the statute of limitations on debt). 

Or if your credit score is hurting because you’ve been having trouble paying all your debts on time, then consider making a plan to get out of debt as quickly as possible. It may seem insurmountable, but it’s not! To help you get more comfortable saving money and chipping away at your debt, take a look at these resource centers for tips on budgeting and paying off credit cards. Knowing what to look for on your credit report can be the key to a more secure financial future, which means you’re already on your way.

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