How to Read Your Credit Report and Fix Errors, Step by Step

Your credit report quietly affects the rates you pay, the apartments you can rent and sometimes even the jobs you get. Here is how to check it and clean it up.

A credit report is a record of how you have handled borrowed money. Lenders, landlords, insurance companies and some employers use it to decide whether to work with you and on what terms.

Mistakes happen more often than many people think. An account that isn't yours, a paid-off debt still listed as unpaid or a wrong address can drag down your credit and cost you money. The good news: you have the right to see your reports for free and to dispute errors.

This guide walks you through it, one step at a time.

Step 1: Get your free credit reports

In the United States, three nationwide credit bureaus collect and keep credit information: Equifax, Experian and TransUnion. A credit bureau is a company that gathers information about how you pay your bills and sells reports to businesses that make decisions about you.

You can get free copies of your reports from all three bureaus at AnnualCreditReport.com, the official site authorized by federal law. You can also call 1-877-322-8228 or request them by mail. Federal law gives you the right to a free report from each bureau at least once every 12 months, and the bureaus have also offered free reports more often, such as weekly. Check AnnualCreditReport.com to see how often you can get them right now.

Be careful of look-alike websites. Some sites advertise "free" reports but try to sign you up for paid services or collect your personal information. AnnualCreditReport.com is the official source.

Tip: Pull all three reports, not just one. Each bureau may have slightly different information, because not every lender reports to all three.

Step 2: Understand what's in your report

Credit reports can look busy, but most follow the same basic layout. Here is what each section usually means.

Personal information. Your name, current and past addresses, date of birth and sometimes employers. This section doesn't affect your credit score, but errors here can be a sign of mixed-up files or identity theft.

Accounts (also called tradelines). This is the heart of your report. Each credit card, car loan, student loan or mortgage shows up here, often with:

• The lender's name and the date the account was opened
• Your credit limit or original loan amount
• Your current balance
• Your payment history, often shown month by month
• The account status, such as open, closed, paid or in collections

Public records. Some reports show bankruptcies here.

Collections. Debts that were sent to a collection agency appear in this section.

Inquiries. A list of who has checked your credit. "Hard" inquiries happen when you apply for credit, such as a new card or loan. "Soft" inquiries happen when you check your own credit or when companies send you pre-approved offers. Soft inquiries don't hurt your credit.

Note that your credit report usually does not include your credit score. A credit score is a three-digit number calculated from the information in your report. Your report is the raw information; the score is a summary of it.

Step 3: Look for common mistakes

Set aside 30 minutes with a highlighter or a notes app, and go through each report line by line. Watch for these common problems:

• Accounts you don't recognize. This could be a simple mix-up or a sign that someone opened credit in your name.
• Wrong payment history. A payment marked late when you paid on time.
• Debts that are paid but still show a balance.
• The same debt listed more than once, which can make it look like you owe more than you do.
• Wrong personal details, like a misspelled name, an address you never lived at or another person's information.
• Closed accounts listed as open, or accounts you closed showing as "closed by creditor."
• Old negative information that should be gone. According to the FTC, most accurate negative information can stay on your report for seven years, and bankruptcy information can stay for 10 years.

Gather any proof that supports your side, such as bank statements, payment confirmations or letters from the lender.

Step 4: Dispute errors with the credit bureau

If you find a mistake, you can dispute it with each credit bureau that lists it. Each bureau accepts disputes online, by mail or by phone, and its contact details are listed on its website and on your report.

The FTC suggests including:

• Your full name and address
• Each mistake you want fixed and why it's wrong
• Copies (never originals) of documents that support your claim
• A copy of your report with the errors circled or highlighted

If you mail your dispute, the FTC recommends sending it by certified mail with a return receipt, so you have proof of when it arrived.

Once the bureau gets your dispute, it generally has 30 days to investigate. It must also pass your information to the business that reported the item, and that business must look into it and report back.

Step 5: Dispute with the business that reported it, too

The FTC recommends also contacting the company that supplied the wrong information, such as your bank or card issuer. Explain the error in writing and include copies of your proof. Fixing the problem at the source can help keep it from showing up again.

Step 6: Check the results

When the investigation is done, the credit bureau must send you the results in writing. If your report changes because of the dispute, you'll get a free copy of the updated report.

If the bureau decides the information is correct but you still disagree, you can ask that a short statement explaining your side be added to your file. You can also send your complaint to the Consumer Financial Protection Bureau (CFPB), the federal agency that oversees credit bureaus.

What if you spot signs of identity theft?

If you see accounts or inquiries you didn't make, act quickly. Consider:

• Contacting the company where the account was opened
• Placing a fraud alert or a credit freeze with the credit bureaus (a freeze stops new lenders from seeing your report, which makes it much harder for someone to open credit in your name)
• Reporting the theft at IdentityTheft.gov, the FTC's official site, which can help you make a recovery plan

Make it a habit

Checking your credit reports isn't a one-time job. Many people review them a few times a year and before big moves, such as applying for a mortgage, car loan or apartment. Put a reminder on your calendar so it becomes routine.

A clean, accurate credit report won't fix everything, but it makes sure you are judged on your real history, and that can mean better rates and more choices down the road.