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Credit Report Basics: What You Should Know

October 16, 2016

Like every adult who’s ever had a credit card, you probably know that you have a credit score that businesses can check to see if you’re a good financial risk. If you regularly request your credit report, which you can do for free once a year, you get an A+ for practicing good identity hygiene. If you’re one of the 33 percent of Americans who has never checked your credit report, or the 50 percent who hasn’t checked in the last year, it’s time! Checking your credit report is one of the best ways to protect yourself against identity theft and to have a quick recovery if your identity is stolen.

Credit Report Basics: What You Should Know

Just to get you started, here’s a quick primer on credit reports. And for those of you who already check regularly, we’ll talk about who else can see your credit report and how you can control who sees it.

What is a credit report? A credit report contains your credit history: credit cards, loans, etc., and information about how promptly you make your payments. It gives your total available credit, and how much of that you’re currently using. It can also show any judgments against you, liens, and accounts that went into collections. All of this is boiled down into a credit score from 300 to 850 that predicts how likely you are to pay back loans or credit on time.

Who can see your credit report? A credit reporting company can send your credit report to creditors, government authorities, landlords, employers or others who they believe have a legitimate reason to use the report, but you have to give written permission for a current or potential employer or landlord to be able to access your report. They can also supply your report in response to court orders or subpoenas, or to any party upon written instructions from you.

How can you control your report? You have several options to control who accesses your credit report:

  • The Fair Credit Reporting Act allows credit card companies and insurers to see limited information on your credit report before they decide, for example, to send you a credit card offer. You can opt out of this pre-screening, which should also reduce all those junk credit card offers in the mail.
  • If you think someone has stolen your identity and is using it to get loans or credit cards or rent property, you can put a freeze on your credit report. It won’t affect your credit score or prevent you from getting cards or loans though there is a fee to put a freeze in place as well as temporarily lift it. And there’s also a bit of a hassle as seen here.

Unfortunately, it is possible that a criminal could pretend to be a legitimate business or landlord and get access to your credit report, which would give them information about your financial accounts. You can protect against that by making sure you have strong, unique passwords on all those accounts and—guess what? —by regularly checking your account statements and credit reports. Which you were going to do anyway, so congratulations, you are now an A+ credit defender!