Your credit report is a snapshot of your loan payment history and status of your credit accounts. Lenders use your credit report and credit score, along with other factors, to decide whether to approve you for credit. That makes your credit score — a three-digit number — pretty important to your financial life. In the third article of our series on financial habits for your 20s, you’ll learn why understanding your credit report is so important to your financial health.

If you missed the first two articles in the series, check out Organize Your Financial Life and Build Your Budget and Track Expenses.

Understanding Your Credit Report: What Is It?

Your credit report is a detailed report of your credit history and it includes information about your credit accounts. For example, if you have credit cards, student loans, a car loan, personal loans or a mortgage, they’ll likely be listed on your credit report. Generally, things that don’t show up on your credit report include utility payments or rent payments, unless your landlord reports those payments through a rent reporting service.

Credit reports come from the three major credit bureaus: Experian, TransUnion and Equifax. These companies use the information reported by your creditors to create your credit report. In terms of your credit accounts, the kinds of things you can expect to see on your credit report include:

  • Account balances
  • Credit limit
  • Payment history
  • Account opening dates
  • Current status of accounts
  • Collection accounts
  • Judgments and liens

Your credit report also includes personal information, such as your name, Social Security Number, birth date, address and employment history. Any time you apply for credit and a lender does a hard check of your credit, that will show up on your credit history, too.

According to a 2016 Experian survey, 50% of Millennials have no idea whether their credit score is good or bad.1

Why Do Credit Reports Matter?

Your credit report is important because it influences your credit score. There are several different credit scoring models but, generally, a higher score means easier approvals for credit and lower interest rates. As mentioned earlier, lenders use this information for credit decisions, but landlords or prospective employers can also check your credit if you’re trying to rent an apartment or land a new job.

Knowing what’s in your credit report can give you an idea of what is contributing to your score. According to a 2016 Experian survey, 50% of Millennials have no idea whether their credit score is good or bad. If you have a low credit score, looking over your credit report can help you pinpoint things you may need to do to address it.

How to Review Your Credit Report

There are a few ways to get your credit report: You can request a free copy of each bureau’s report each year through, or purchase your reports directly from the credit bureaus. If you’ve never looked at your credit report before, it may be helpful to pull all three reports at the same time so you can see how the information compares. Some creditors, for example, may report to one or two bureaus but not all three.

Once you’ve got your credit reports, go over them carefully to make sure your personal information is correct. Then, move on to your credit accounts. Check to see that the balances and payment history are accurate. Look for any late payments, collection accounts or judgments that could be affecting your score and determine if they are accurate.

Take a look at recent inquiries to make sure you know who’s been checking your credit. If you spot a creditor you don’t recognize, for instance, that could be a sign of fraudulent activity or identity theft. Finally, look for any errors or inaccuracies. If you spot something that looks incorrect, you can contact the bureaus to dispute it.

Understanding your credit report can go a long way toward helping you achieve a better credit score in your 20s and beyond. Reviewing it regularly can help you keep track of your progress as you work on improving your credit score.


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