Your Guide to Understanding The Government Free Credit Report
Do you know the disappointment of finding out that someone isn’t as trustworthy as they presented themselves initially? That hurts in personal relationships, but most people don’t realize that it’s a factor in the financial world as well. You can tell a lender that you have stable employment, pay your bills and are trustworthy for a loan, but they need something to back up your word. That’s when they check your credit report and let your history speak on your behalf.
If you aren’t checking your government free credit report annually, you don’t know if your credit history is helping you get ahead or holding you back. That’s a problem that we want to help you fix right away.
Government Free Credit Report Basics
Negative entries on your credit report can cost you money as utility and insurance companies ask for deposits and auto or home loans are offered with higher interest rates. It’s to your advantage to back up your good word with a great credit report, but first you must understand the importance of credit and what role your credit report plays. The best credit report is the one provided by the government annually because it's free.
We want to show you how to get your free credit report once a year and what to do with it once you have it, so let’s get started.
How to Get Your Government Free Credit Report
There are three credit bureaus that collect information regarding your identity and credit history:
TransUnion
Equifax
Experian
Since each bureau may end up with different information at different times, you technically have three credit reports that could land in the hands of future lenders, employers, utility companies and anyone else who considers placing their trust in you. You’re entitled to one government free credit report from each of the three credit bureaus annually.
While there are websites and services that will offer to help you get your free annual credit report, you should never pay someone or provide your personal information in exchange for your free reports. You can secure all three once every 12 months by doing one of the following:
Call 877) 322-8228
You will need the following information to gain access to your credit reports:
Name
Address
Social security number
Birth date
The trickiest part is answering security questions regarding information that is already on your credit report. That may sound hard, but everything on your report relates to your personal history. For instance, one question may ask about the make and model of a car you previously owned while another relates to the lender for your current home loan. You will answer these questions for each of the credit bureaus each time you request your government free credit report.
You have the option to check all three of your credit reports at once or spread them out over the course of the year. If you haven’t looked at your credit report in a long time or you have never checked it for errors, you should get all three as soon as possible. That allows you to get a complete look at all entries collected by all three bureaus up to this point.
Credit Report vs. Credit Score
Understanding how credit works and using it to your advantage starts with knowing that your credit score is different from your full credit report. When you request your government free credit report, you will receive only the report. The government doesn’t provide a free credit score, but there are services like Credit Karma and Credit Sesame that will provide a free score every month.
For now, it helps to understand the difference between a credit report and a credit score:
Credit Report
A full report with details regarding your credit history, identity and court judgments. Your report will name lenders, specify credit limits and tell future lenders how reliable you have been on payments to lenders in the past.
Credit Score
The details in your full credit report are reduced to a single number that gives lenders a quick glance at your financial responsibility in the past. Scores go from 300 to 850. You can have no credit score if you have never secured a loan or credit card.
More than 60% of Americans have credit scores of 670 or higher. While higher scores may help you secure loans with the best interest rates, you shouldn’t focus only on your score. That score reflects the details in your credit report, so it’s important to understand what’s on your report. Knowledge is the first step to clearing up errors and strengthening your chance of getting the loans you need at interest rates you can afford.
Dissecting Your Credit Report — What’s Included?
If you haven’t secured your government free credit report yet, now is the time. We’re going to walk you through each section of the report so you know what type of information is collected there and how it can impact your credit score and financial reputation. If you don’t have your report in front of you now, read now and come back later if you need a reminder of the important parts of each section.
Personal Information
Your government free credit report serves as a central location for all of your personal information as you move through life. The details include:
Addresses
Names
Employers
When you buy a home, rent an apartment or change your mailing address to a friend’s house, all of those addresses are likely to end up on at least one of your credit reports. Your report should also reflect name changes, including any misspellings that may creep into your history. Employers aren’t always as up to date as names and addresses, but they can make an appearance on your government free credit report as well.
Lenders generally won’t check your credit report just to see your personal information. They may glance at it to make sure you are who you present yourself to be or to check for stable employment history. You can expect to provide a social security card, paycheck stubs and other documentation to prove your identity and income when applying for most loans.
Accounts
This is the section most lenders want to look at when checking your credit report. All accounts that you open over the years can make an appearance here. The accounts are generally grouped into the following categories:
Active Accounts
These are the lines of credit that are currently active. Your car and mortgage loans along with all active credit cards should be listed, but that doesn’t mean they’re all in good standing. Your report will show how many missed and on-time payments you have made and how much of your credit line is currently in use. If you have maxed out all of your credit cards or are carrying balances above your maximum limit, it will show.
Closed Accounts
This category may include accounts you have previously paid off or those that closed in good standing.
Delinquent Accounts
Do you have credit cards that were closed due to nonpayment? What about car repossessions and the money you still owe those car loan lenders? Those negative accounts will show on your credit report as delinquent even if the original lender has sold the debt or written it off. These accounts can substantially lower your credit score and may lead to future credit denials.
Do you see medical bills on your government free credit report? That may surprise you since bills aren’t the same as credit cards or lines of credit. Medical providers can add entries in the accounts section of your report if you fail to pay or make adequate installment plans. Experian provides a good update on when you can expect medical debt to become a credit report issue:
“To help standardize medical debt reporting and protect consumers' credit reports from being unduly affected by medical debt, the three major credit bureaus (Experian, TransUnion and Equifax) now employ a 180-day waiting period before medical debt appears in your credit history.”
Public Records
If you file for bankruptcy or receive a civil court judgment, it will appear in this section of your government free credit report. If you’re evicted from an apartment, it can show up as a civil court judgment. That may impact your ability to secure housing in the future. Some states allow foreclosures and repossessions to appear in the public records section as well.
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Tax liens were once included as well, but there were too many cases of inaccurate reporting. You should no longer see tax liens reflected on your government free credit report.
Inquiries
Anytime someone looks at your credit report, they’re recorded as an inquiry. Not all inquiries can lower your credit score or have a negative impact on your credit worthiness as viewed by lenders. It helps to break down the different types of inquiries so that you know how to manage them in the future.
Hard Inquiries
When you authorize a credit check in order to secure a loan or line of credit, a hard inquiry is placed on your credit report. Each hard inquiry can lower your credit score by a point or two, but one or two spread out over time isn’t likely to hurt you too much.
Hard inquiries can become problems when you have too many of them. A sudden string of hard inquiries may signal that you’re about to accumulate a lot of debt or that you’re desperate for cash. Some lenders may take that as a sign that you’re less likely to pay back any money they loan you at the time.
Excessive hard inquiries can also hurt your credit score if each one lowers your score at the same time.
Soft Inquiries
Have you ever received pre-approved offers for credit cards, auto loans or lines of credit? If so, those lenders likely looked into your credit report before sending the offer. Those are all registered as soft inquiries because you didn’t authorize them in active pursuit of loans. Credit checks by potential employers may also register as soft inquires.
The bad news is you have no control over these inquiries because they’re often requested without your knowledge or consent. The good news is they won’t lower your credit score no matter how many you receive. It’s still good to look at your soft inquiries when reviewing your government free credit report to gain insight on who is interested in your credit history.
How Long Does Information Stay on Your Credit Report?
Hopefully you were reviewing your government free credit report as we worked through that dissection. If not, make sure to secure your free credit report and go back to thoroughly analyze all the information presented on all three reports. Once you know what’s there, you may wonder how long your delinquencies, bankruptcy and other damaging information will remain on your report.
Hard Inquiries — Up to two years, but they shouldn’t impact your credit score for more than 12 months.
Delinquent Accounts — Approximately seven years
Missed Payments — Approximately seven years
Bankruptcy — Up to 10 years
The word “approximately” appears a lot on that list because there are no exact dates that you will see a negative mark fall off your government free credit report. You should start to see old debt start clear up around the seven-year mark, but it may go away a bit sooner or take slightly longer.
Allowing old debt to clear your credit report can improve your credit score, but that only works if you aren’t adding new delinquent accounts and late payments over time. The sooner you start to pay your bills on time and keep your accounts in good standing, the faster you can see improvements to your credit score.
When to Check Your Credit Report for Errors
Errors on your credit report can affect your credit score, which in turn affects your ability to secure reasonable interest rates and terms when buying a car, refinancing your home or securing a personal loan. While we are on the topic of loans, if you are considering taking one, we can help connect you to a reputable lender. You just need to fill in the form below, and then based on your credit score, we can help you get in touch with a suitable lender. Don’t waste your time, fill it out now:
Use the dissection of the government free credit report included in this guide to go over every section of your report. Pay close attention to the details, including addresses and names associated with your report.
You should do this for all three of your credit reports annually, but you don’t have to do all three at the same time each year. You may check them all now and then stagger them throughout the year next year, allowing you to keep up with your credit reports on a routine basis.
You may also see value in credit monitoring services. They allow you to receive prompt notification if erroneous or fraudulent information hits your report. You will still need to secure your government free credit report once a year to manually check for errors, but fast notification when something hits your report can help you clear up inaccuracies quickly. It may also alert you to identity theft, which is a real problem today.
How to File Disputes for Inaccuracies
All three credit bureaus provide online forms that help you file disputes quickly. It doesn’t cost you anything to file a dispute, and results in your favor should lead to immediate removal of the inaccurate information.
Correcting names that shouldn’t appear on your credit report may require you to call the credit bureau. You may also choose to call if information isn’t removed after you file a dispute. While the credit agency can’t always reverse a decision, they can provide further information on why they chose not to remove the information from your report.
Reasons to Check Your Credit Report ASAP
Are you still waiting to secure your government free credit report from all three credit reporting agencies? You may not have time to go through all sections of the report and check for errors right now, but take the first steps to secure your reports and save them for a better time.
You should look over your credit report now if any of the following scenarios apply to you:
- You want to secure a personal loan for any reason in the next 12 months.
- You’re ready to buy a home or a new car in the next year or two.
- You have any reason to believe that erroneous information is presented on your credit report.
- Your name has been included in one of the many credit breaches in recent years.
- You’ve been denied for a line of credit, credit card or loan.
- You think your credit score is lower than you would like.
- You’re looking for a new job and know some employers may check your credit.
Finally,
The faster you get your credit report, the faster you can start clearing up inaccuracies and delinquencies that are dragging your credit score down and costing you money. It’s a reflection on your financial reputation, and you deserve to know what others are seeing when they look into your credit.