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Understanding Your Credit Report and Credit History

School report cards contain numbers or letters summarizing and evaluating students’ performance. As they get older, these report cards may be used to help determine students’ eligibility and acceptance into colleges or other programs.

Your relationship with your Equifax credit report isn’t much different. It tells a detailed story about you, and includes information about your financial accounts, and your payment history. Those who can access this information, including third parties with “permissible purpose”, may accept or deny your applications for credit based in part  on the information in your credit reports, as well as their own lending criteria. With your permission, potential employers and landlords may access your credit reports. Simply stated, your credit report is made up of:

  • Personal information such as your full name, address, etc.
  • Account information from lenders and creditors who report it to the three major credit bureaus
  • Public records information such as bankruptcies or tax liens
  • Debts you have failed to pay or accounts turned over to a collection agency

 

Why Credit Report Inquiries Are Important

Inquiries on credit reports show which third parties have asked to check out your credit report and when their request was made.  When a lender or company makes this request, it is recorded as a “hard inquiry,” and it may impact your credit score. 

Examples of “soft inquiries” would include checking your own credit or when a company checks your credit report to prescreen you for unsolicited offers such as credit cards or insurance. These do not impact your credit score.

It’s important to know that checking your credit report regularly is not a “hard” inquiry and will not impact your credit score. In fact, familiarizing yourself with the information in your credit report can help you more closely monitor your other financial accounts. Being able to recognize inaccurate or incomplete information or suspicious inquiries may also help you detect an early warning sign of potential identity theft.

 

Do Your Credit Homework

The more you know about your financial accounts and credit history before making a big decision like buying a house or a car, the more prepared you will be to take on the financial obligations that may happen as a result. Here are some things to consider as you take steps to proactively plan your finances:

  • Check your credit reports and credit scores before getting quotes to understand what information potential lenders and creditors are evaluating. (You can get one free annual credit report from Equifax, Experian and TransUnion at www.annualcreditreport.com.)
  • When shopping around for a loan, consider: if you apply for a loan with different lenders to see different interest rates they can offer you, the inquiries may impact your credit score. 

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  1. Locking your Equifax credit file will prevent access to it by certain third parties. Locking your Equifax credit file will not prevent access to your credit file at any other credit reporting agency. Entities that may still have access to your Equifax credit file include: companies like Equifax Global Consumer Solutions which provide you with access to your credit report or credit score, or monitor your credit file; federal, state, and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com.