The credit report conversation

Kathy

Last fall, when I wrote about my experience moving into a new apartment, I mentioned one of the important things to know about in order to properly manage your credit: your credit report.

As part of this special series on credit, let's take a step back and examine the credit report in a little more detail. To do so, I am going to have a pretend conversation with a Curious Mythical Reader (CMR). There's even an imaginary guest appearance from the Fair Trade Commission  (FTC)! Check it out:

CMR: So, like, what is a credit report anyway?
KD: Instead of trying to reinvent the wheel, I'm going straight to the government's source for consumer protection — the FTC — and their website's definition of credit report: 

FTC: "Your credit payment history is recorded in a file or report. These files or reports are maintained and sold by consumer reporting agencies (CRAs). One type of CRA is commonly known as a credit bureau."

KD: There are three main credit bureaus in the United States: 1. Equifax , 2. Experian  and 3. TransUnion. 

FTC: "You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance or a job."

KD: In other words, there are lots of areas in your life that have the potential to end up on your credit report.

FTC: "Your credit record contains information about your income, debts and credit payment history. It also indicates whether you have been sued, arrested or have filed for bankruptcy."

KD: The good, the bad and the ugly, folks. It's all in there.

CMR: Okaaaaaaaay...but why do I need to know about it?
KD: There are lots of reasons to be aware of what is in your credit report. The information listed in each credit record says a lot about you, and it provides an indication of your ability to make payments on time. It is often used as a personal reference by employers and landlords, since how you have managed your money in the past may be an indication of future behavior. Utility companies may look at your credit report before they agree to turn on your electricity, cable television, phone, etc. Lenders, such as banks, car companies and more, will use the information in your credit report to determine whether they will lend you money and at what interest rate.

CMR: Hmmmm, I have also heard something about identity theft...?
KD: Yup. As if all reasons people use your report weren't enough, it is also very important to keep tabs on your credit report to make sure that you have not been the victim of identity theft. You should carefully check the information listed in the report to make sure that only the accounts you have opened are listed in the report. If someone else opened a credit account under your name, you need to know about it as soon as possible and immediately take steps to correct it!

CMR: Whew! That was a lot of information...
KD: And I'm just getting started. Next time we'll cover how often you should check your credit report and what to do if you find any errors.

In the meantime, anyone out there with questions?