What’s in your credit?

It’s that magical time of the year, when many Americans go crazy with spending on their credit cards. Which means it’s a good time to review your credit report to make sure that the information is accurate, and no one has opened accounts in your name.

How do I check my credit report?

Checking your credit report is simple thanks to legislation that requires the three major credit reporting agencies to provide your credit report annually for free

Here’s the trick though: you can’t go straight to the agencies to get the free credit report. You have to go to the government website annualcreditreport.com. I know that sounds like a shady website, but it is legit. From there, you’ll link to the credit agencies and you can access a free credit report.

Note: do NOT go to freecreditreport.com. You do NOT get all three free credit reports through this website. It is a “freemium” service of Experian (you don’t pay to sign up, but you do pay for the stuff you actually want).

Get on a schedule

Annualcreditreport.com allows you to check each of the three credit bureaus once every 12 months. It tracks each one individually which means you have a couple of options.

1. Check all 3 every 4 months: If you are paying close attention to your credit, either because you’re the victim of identity theft or you are working to repair your credit, then you may want to spread out when you get each report. Since they are tracked separately, you could get your Experian report each December, your TransUnion report each April, and your Equifax report each August.


2. Check all 3 once a year: If you don’t want to think about this constantly throughout the year, at least get your reports from all agencies once a year.

What about my credit score?

Many sites will try to sell you your credit score, but you don’t need to know your credit score because your credit score is only important when you go to open a new line of credit or apply for a new loan. Even those rare times when it’s helpful to know your score, there are other ways to get it when you actually need it. For example, when applying for a mortgage, ask the bank to let you know your scores.

How do I read this gibberish?

Credit reports are not very user-friendly. They’ve gotten better recently and each of the three agencies has samples online to help you read the reports, but they can still be difficult to read and more difficult to fully understand. Follow these simple steps to make the task more bearable:

1. Start with the Open Accounts list since it’s fairly simple. Check to see if you know about each of the accounts, and look for any old accounts that you no longer use that you can close.

2. Check the credit limits for each of your accounts. There are times when your credit cards send you notices saying something to the effect of “Congratulations! We’ve increased your credit limit to ____”. This is often welcome if it’s a credit card you actively use, but for older cards that you don’t use regularly, it can be an annoyance, especially if you threw away the notice without opening it. It’s an annoyance for a couple of reasons. First, if someone steals the information necessary to use that card, they can now spend more money under your name. Second, when you try to open a new account, credit companies look at your total available credit to decide if and how much they will lend you. When my older brother--who shares a first name with our father--applied for a mortgage, he was denied because his credit report had one of our dad’s company credit cards showing on his credit report, and because of that extra available balance, his application was declined.

3. Finally, look at the most confusing part--the payment information for each account. This is usually shown as a series of boxes with one of a few codes in it. Each box represents a month and the report shows up to 10 years of information on each account. The codes are listed below, but anything other than OK should draw your attention.

These are the Experian codes. Codes for Transunion and Equifax are similar, but of course not the same.

OK = at least the minimum payment received on time
CLS = Closed
ND = No Data (no credit used for that period, so no payment was due)
30 = payment received more than 30 less than 60 days late
60 = payment received more than 60 less than 90 days late
90 = payment received more than 90 less than 180 days late
180 = payment received more than 180 days late
R = Repossession (for credit used to buy a specific good like furniture, cars, etc.)
VS = Voluntarily Surrendered (the borrower returned the good and didn’t pay the debt)
PBC = Paid By Creditor (I haven’t been able to find information on this code)
IC = Insurance Claim (if the creditor is trying to file an insurance claim to receive payment)
G = Claim filed with Government (the creditor is trying to receive payment from the government)
D = Defaulted on contract (failed to pay on time)
C = Collection (Debt was sold to a collection agency)
CO = Charged Off (the creditor has written the debt off as bad debt they never expect to collect)
F = Foreclosure
FS = Foreclosure Started (the procedure has started but hasn’t happened yet)
CRD = Creditor Received Deed

What now?

Now it’s time for you to go to annualcreditreport.com and click through to one of the credit bureaus to get your free copy of your credit report and start looking for false data. Remember, no one can repair their credit quickly or easily so always be wary of any company that claims to do either for you.