How to look at your credit report

It isn’t unusual to feel intimidated by your credit report. It’s the basis for all present and future financial dealings you will make. It’s also something that can start well and go down very quickly with little turnaround time.

But did you know that you have more than one credit score? A handful of agencies track your credit usage and assess a score for you based on their formulas. Here’s a deeper rundown on credit reports:

Entitled to one free report per 12 months

Federal law entitles you to get a free copy of your credit report every 12 months. This enables you to look through it to make sure no “surprises” appear like a credit card you didn’t sign for or an address which isn’t even close to the one you consistently report. Doing this ensures your credit isn’t compromised by an identity thief. Visit www.annualcreditreport.com to get started on your free credit report.

Three credit report agencies

Experian, Equifax and TransUnion are the credit agencies that collect all information related to your credit. The agencies evaluate your credit history, performance and usage and each assess a score, ranging from the low 500s to a maximum of 850. A score in the 700s is considered good-average, while a score that hovers near 600 is a greater credit risk for lenders.

Understanding hard, soft inquiries

Each time you apply for a new line of credit, it appears as an inquiry on your credit report. Soft credit inquiries are usually agencies that are just “checking” your credit report. A hard inquiry is done by someone that is looking to loan you a line of credit. This type of inquiry can stay on your credit report for two years. It’s important to take this into consideration when applying for multiple lines of credit. Doing back-to-back credit card applications can come back to haunt your credit history if you’re careless.

Ready to reevaluate your credit? We’ve partnered with the BALANCE Financial Fitness Program to provide free financial counseling and education for our members.

BALANCE Annual Credit Report