What Is Credit Reporting?

Credit reporting is the process of collecting information on how you manage your debt. This information is gathered by credit bureaus, which then compile it into a credit report, a record that changes over time. Credit issuers and lenders use these reports to better understand your credit and financial habits and determine whether to approve you for credit or a loan.

What’s in a credit report?

A credit report contains both personal and financial information, and often includes:

• Identifying information: Your name (or names), current and previous addresses, phone numbers, Social Security number, date of birth, employers if reported
• Account information: Names of account holders and lenders, account numbers, account open and close dates, type of credit or loan and the terms, balances and credit limits
• Payment status: Payment status, late payments, accounts in collections, charge-offs, foreclosures or repossessions (on your report for 7 years) 
• Credit inquiries: Hard inquiries indicating when you applied for credit; soft inquiries such as prescreened credit offers or self-credit checks
• Bankruptcies: Chapter 7 (on your report for 10 years) or Chapter 13 (on your report for 7 years)

Note: A credit report does not show your credit score. The score is a separate rating derived from the information in the report. Mortgage lenders look at your credit score, but also your report to review your payment history and determine your debt-to-income ratio (DTI).

How does credit reporting work?

The credit reporting system is a constant cycle of information-gathering. Every time you use a credit card, make a car payment or take out a loan, that activity gets reported to the credit bureaus by the creditor or lender.

Credit reporting also comes from public records, and can come from your landlord and utility companies. You can’t report information to the credit bureaus yourself, but there are services that can report your payment history on your behalf, such as Zillow’s rent reporting. This could help you build credit if you haven’t used it much in the past.

The information gathered for credit reporting is shared with Equifax, Experian and TransUnion, the three major credit bureaus. They collect and organize your information into your credit report and use that data to calculate a three-digit credit score. When you apply for new credit, the creditor or lender pulls your report and score from one or more of the bureaus to help guide their approval decision.

How do I check my credit report?

You can check your credit reports from each of the three credit bureaus (Equifax, Experian and TransUnion) for free once a week at AnnualCreditReport.com.

Many banks and credit card issuers provide credit scores to customers, as well, usually through online banking or an app. This is just one score from one bureau, not your full credit report.

There are other ways to check your credit score, too, such as with a credit monitoring platform. This may cost money, depending on the service.

What can be removed from a credit report?

Generally, you can request the removal of inaccurate information from your credit report. This includes errors like:

• Incorrect contact information
• Incorrect account statuses
• Incorrect late payments 
• Information that might point to identity theft

If the credit bureau can’t verify the information, it has to be removed, as well.

Note: You can’t remove accurate information, even if it’s negatively affecting your credit. Some information, like a foreclosure, remains on your report for 7 years.

How to clean up your credit report

To clean up errors on your credit report, dispute the inaccuracies with the credit bureau reporting them. You can do this online on the bureau’s website, by mail or by phone. Here are the steps:

1. Prepare evidence to support your dispute, such as bank statements, bills or receipts.
2. Contact the credit bureau by mail, phone or online. If online, you’ll be prompted to upload supporting documents or images.
3. Track the status of the dispute. If you filed online, you might need to log in to a portal to see it. The bureaus typically take 30 days to investigate a dispute. If the inaccuracy is confirmed, it’ll be removed from your report. If not, you can try again by submitting another dispute, or you can add a short statement to your credit report explaining the situation. 

Whether you’re apartment-hunting or planning to buy a home, it’s important to understand how credit reporting works. Continue to monitor your credit reports and dispute any errors to put yourself in the best position on a rental or mortgage application.