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Published: May 25, 2023 11 min read

If you’re like a lot of people, whenever you make a money misstep, your first thought is something along the lines of, “Oh no, what will this do to my credit report?”

Credit reports can seem daunting, especially when it comes to figuring out what exactly works in your favor — and what doesn’t. Common hiccups include late payments (even by a day!), credit history and a whole host of other things that can impact your credit score. For many people, taking control of your credit score is an important step on your personal finance journey.

If you plan on applying for a new credit card, a new apartment or any sort of loan, your credit report can carry a lot of weight when it comes to whether or not you get approved by lenders.

Table of contents

What are the key components of a credit report?

A credit report is a detailed compilation of your credit history, and understanding its components can help you navigate the complex world of credit.

Personal information

This part of your credit report includes basic details like your name, address, Social Security number and date of birth. While this information doesn't affect your credit score, it helps lenders verify your identity and ensure they're pulling the correct report.

Credit accounts

This section outlines your existing credit accounts, such as loans and credit cards, along with their balances, payment history and credit limits. Lenders evaluate this information to understand how responsible you've been with credit in the past and whether you can handle additional financial obligations.

Public records

Public records on your credit report include any legal actions involving your finances, like bankruptcies, evictions, tax liens and judgments. These entries generally have a negative impact on your credit score and can linger for several years, so it's crucial to avoid such issues if possible.


When you apply for credit, lenders perform a "hard inquiry" on your credit report, which may temporarily lower your credit score. These inquiries stay on your report for two years but typically only ding your score for a short period. If you're shopping around for loans, look for estimates calculated based on "soft inquiries," where the lenders don't actually pull your credit score. Then, when you're ready to apply, the lender you chose can do a hard pull. This credit check report will last for a month, and any other pulls during that time don't usually count against you.

Payment history

One of the most influential factors in determining your credit score is your payment history. Lenders want to see a consistent record of on-time payments, as it indicates you're a reliable borrower. Late or missed payments can significantly hurt your score, so it's essential to stay on top of your due dates.

Credit utilization

Your credit utilization ratio compares your outstanding account balances to your available credit limits. A high utilization rate suggests you may be relying too heavily on credit, which can be a red flag for lenders. Aim to keep your credit utilization under 30% to maintain a healthy credit profile. For example, if you have three credit cards totaling $10,000 worth of credit, try not to use more than $3,000 between the three cards.


Unpaid debts turned over to a collection agency will appear in this section of your credit report. Collection accounts can significantly damage your credit score and remain on your report for up to seven years, so it's crucial to resolve these issues as soon as possible.

Account status

Your account status displays whether your credit accounts are current, late or charged off. This information is used by lenders to analyze your credit risk and determine your eligibility for new credit.

Credit score

Your credit score is a three-digit number calculated using information from your credit report. It represents your creditworthiness and is used by lenders to assess your likelihood of repaying a loan or appropriately handling credit. A higher score improves your chances of acceptance and may entitle you to lower interest rates and conditions.

Generally, "good credit" starts with a score of 670 to 690, "very good" starts around 740, and 800 and up constitutes "excellent" credit. Exact determinations are up to the lender and the credit scoring model.

How to read your credit report step-by-step

Navigating the world of credit can be tricky, but understanding your credit report doesn't have to be. Knowing how to read your credit report empowers you to make informed decisions and take control of your credit journey with confidence.

Step one: Get a free credit report

You can order a free copy of your credit report from any of the three major credit bureaus: Equifax, Experian and TransUnion — or you can get all three reports at once on the government website AnnualCreditReport.com.

Any of these options will give you a number from at least one (and oftentimes both) of the most widely used credit scoring systems: FICO Score and VantageScore. Both use formulas that assign your credit a number between 300 and 850, with 850 being the highest.

You might see a slight variation in your score, since FICO Score and VantageScore use different proprietary formulas, but for most people that difference will only amount to a few points or less.

Step two: Take a look at your personal information

Your credit report will always list out some basic information to ensure the report you’re reading actually belongs to you, which is a useful tool when it comes to protecting yourself from identity theft. It will contain any variations of your name you’ve used in the past — including maiden names or nicknames — as well as your phone number and previous addresses you’ve lived at.

You’ll also see your Social Security number — or at least part of it — as well as your birthday. The report will also include the employment history you’ve listed on any applications for credit.

Nothing in the personal information section of your credit report will impact your credit score.

Step three: Check the “credit history and accounts” section

This is the biggest, most daunting piece of your credit report, since it lists all of your existing lines of credit and current balances, as well as any open and closed accounts active within the last 10 years.

Most importantly, this is where you’ll also be able to see your credit utilization ratio — which weighs your available credit limit against the amount of debt you currently owe. Revolving accounts, such as credit cards, require varying monthly payments and can impact your credit utilization ratio. (Remember: No matter what your combined credit limit is, it’s best if you try to keep your usage under 30%.)

You’ll also see data on your payment status history, which includes debts you’re currently paying down as well as any debts you’ve paid off and closed within the last decade. For each mortgage, car or student loan, your report will show whether or not you are current on your payments, and will note any late or missed payments.

This section also lists any accounts for which you are an authorized user. Installment loans, such as mortgages and auto loans, require regular monthly payments and are a key component of your credit report. This includes home equity lines of credit and what you owe against them. All of these lines of credit will note the exact dates that the accounts were opened and closed, so the length of your payment history is crystal clear.

It will also make note of who closed each account — and note whether it was a creditor you didn’t make payments to on time, or if you closed the account yourself while maintaining a status of good standing.

All of these factors, good and bad, help determine the number that represents your credit score.

Step four: Scan for negative information

The “negative information” section, sometimes listed as “public records,” is a running tab of everything that can lower your credit score. These include red flags like bankruptcies, foreclosures and repossessions.

All of this data listed here has the potential to ding your score, but most bad marks go away after seven years. The exception is Chapter 7 bankruptcy, which will stay on your credit report for 10 years.

A list of all your credit inquiries will also appear on your credit report, since hard inquiries can act as a signal to lenders that you want or need more credit, which is another negative item.

Soft inquiries come from checking your own credit — which many banks allow you to do for free from their website or app —or when you authorize someone else to do so, like a potential landlord. These types of inquiries also appear on your credit report, but they don’t impact your score.

Step five: Dispute any errors

The Fair Credit Reporting Act (FCRA) governs the collection and reporting of credit information, ensuring accuracy, fairness and privacy. If you come across any inconsistencies in any of the steps listed above — even if it’s seemingly as small as an incorrect zip code on an old address — contact the credit bureaus and the company that authorized the line of credit and ask how to fix the error.

Correcting more serious errors, like accounts that are wrongfully reported as past due or delinquent, will require filing an official dispute letter.

Since negative information can hurt your ability to qualify for a credit card, the loan amounts or credit limits you get approved for, you’ll want to get this sorted out as soon as possible.

How to read your credit report FAQs

How can I dispute errors on my credit report?


If you spot inaccuracies, take action right away. To dispute credit report errors, follow these steps:

    1. Gather supporting documentation: Collect any relevant documents that support your dispute, such as account numbers, statements, payment records or correspondence with the creditor.
    2. Contact the credit reporting agencies: Write a detailed letter to the credit bureaus (Experian, Equifax and TransUnion) explaining the error and provide copies of your supporting documents.
    3. Contact the creditor: Notify the creditor responsible for the incorrect information and provide them with the same documentation you sent to the credit bureaus. Request that they update the information in their records.
    4. Follow up: Keep track of your dispute and follow up with both the credit bureaus and the creditor to ensure that the corrections are made.

What details should I look for when reviewing credit accounts on a credit report?


When reviewing credit accounts on your credit report, pay attention to the following details:

    1. Account type: Verify whether the account is revolving (like a credit card) or installment (like a mortgage or car loan).
    2. Account status: Check if the account is in good standing, delinquent or charged off.
    3. Credit limit and balance: Confirm the credit limits and balances listed for each account are accurate.
    4. Payment history: Review your payment history for any late or missed payments, and ensure the reported information aligns with your records.
    5. Date opened and closed: Double-check the opening and closing dates for each account, as these can impact your credit age.

What should I know about inquiries and how they are reported on a credit report?


Inquiries refer to requests made by lenders to access your credit report when you apply for new credit. There are two types of inquiries:

    1. Hard inquiries: These are the result of applications for credit, such as loans, credit cards or mortgages. Hard inquiries may temporarily lower your credit score and remain on your report for two years.
    2. Soft inquiries: These occur when you check your credit or when a lender pre-approves you for an offer. Soft inquiries do not affect your credit score and are visible only to you.

When reviewing inquiries on your credit report, ensure all hard inquiries are from your legitimate credit applications.

What are some red flags to watch out for when reading a credit report?


When reading your credit report, be on the lookout for the following:

    1. Late or missed payments: These can severely damage your credit score, so ensure that your payment history is accurate.
    2. High credit utilization: If your credit utilization rate is consistently above 30%, it may indicate that you're relying too heavily on credit, which can concern lenders.
    3. Collections: Unpaid debts sent to collections can significantly harm your credit score and stay on your report for up to seven years.
    4. Public records: Bankruptcies, tax liens and judgments on your credit report can lower your score and signal financial instability to lenders.
    5.Unfamiliar accounts or inquiries: If you notice accounts or hard inquiries that you don't recognize, it could be a sign of identity theft or fraud.

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