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What is a Credit Report and How Do I Read It?

Posted on July 30, 2019

business woman looking over her reportYou’ve probably heard a lot about your credit score and how it can impact your finances, but do you know what makes up your credit score? It’s not just a random number picked out of the air and assigned to you. Your credit score is a number reflecting how much of a risk you are when it comes to lending you money. The higher the number, the less of the risk you are. If you haven't checked your credit score recently and you are a Pioneer member, you can see your current FICO score on myPioneer.

Your credit score is based off of information from your credit report. While your credit score is just a three digit number, your credit report is a large and complex document full of information all about you. It’s a very useful tool to help you improve your credit score and monitor your credit, so it’s important to learn what it is and how to read it.

What is a Credit Report?

man is confused while looking at a laptopA credit report is a record of everything you have done concerning credit, debt, and loans. There are three organizations that keep track of all this, called Credit Bureaus. The three credit bureaus are: Experian, Equifax, and TransUnion.

By working with lenders, banks, and other institutions, a lot of your financial information gets sent to these credit bureaus. From when you got your first credit card to the monthly payments you make on your car, all of that is collected by a credit bureau. All of that information is stored in your credit report, for better or for worse.

Your credit report is a long list of everything you’ve done with your credit. That includes applying for a new credit card or loan, making regular payments, how much money you owe, both to individuals and as a whole, missed payments, and things like bankruptcy. Your credit report goes back seven years of history, but once it’s past seven years, it leaves your report.

How Do They Make a Credit Score From My Report?

Data from your credit report is used to create your personal FICO credit score. Some factors have a much higher importance to your credit score than others.

What makes up your FICO credit score:

  • Payment History - 35%
  • Credit Utilization - 30%
  • Length of credit history - 15%
  • New Credit - 10%
  • Credit Mix - 10%

All of these factors can be found in your credit report. It’s important to understand each part and how they impact your score.

Download this brochure on improving your credit score!

Understanding Your Credit Report

young woman looking at a laptop surrounded by booksYou can order a copy of your credit report from each agency once a year for free through AnnualCreditReport.com. Credit reports are broken up into four sections: personal information, public record information, creditor information, and credit history requests.

Your personal information includes your full name, social security, address, date of birth and similar information. Be sure everything is accurate here. Mistakes on your personal information is a huge hint there may be other errors on the rest of your credit report.

The next section, public record information, contains info credit unions can pull from public records that can pertain to your credit situation. That includes things like having your wages garnished, declaring bankruptcy, or a lien on your property.

The third section, the creditor information, is where a large majority of your credit information is housed. This is where creditors report to the bureaus what you are doing regarding your credit, including making payments, applying for new accounts and more.

The final section is a record of anybody who has pulled your credit through a hard inquiry. A hard inquiry is when somebody is checking your credit for the purpose of lending you money or a similar situation. These stay on your credit report for seven years and can affect your credit score. Soft inquiries are another way people can look at your credit, but it is not recorded on your credit report.

Reading the Creditor Information Section

blonde woman writing while sitting outside at a tableThis section is where you’ll spend a majority of your time looking through. Every credit account is listed here, including ones you’ve already closed. From there, you can see the status of each account, how much money you owe, your most recent payment and more.

Typically, your positive and negative account summaries are split into separate sections. Negative accounts also will list what you did wrong. That could include missing a payment, missing multiple payments, having a debt go to collections, and more.

If you want to get more in depth about your credit report, Pioneer members can utilize financial counselling through GreenPath for free! They can help identify negative parts of your credit and work with you to create a plan to raise your credit score.

Acting on your Credit Report

two young people sitting and looking at a laptop and talkingUnderstanding your credit report is a great start, but if you want to improve your credit score, you need to act now. There are two main methods on how to improve your credit: build a more positive credit history or try to repair your credit.

Credit repair is where you go through your credit report and look for mistakes, especially among your negative accounts. When you see a mistake, you can send a letter to the correct credit bureau disputing it, and if it is a mistake, get it removed from your report. Get enough negative marks removed and your credit score can raise a significant amount.

To build a positive credit history, you need to make sure you pay off all of your bills on time and try to lower your general debt. It takes time to improve your credit this way, but if you keep at it, you can get to a good credit score!

If you want a more thorough investigation of your credit, get a free Credit Checkup through Pioneer. A Pioneer loan officer will analyze your credit situation and work with you to create a plan on how to improve your score.

Get Your Free Credit Checkup!

Member Benefits to Build Your Credit

Options available to members to improve their credit score:

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