Monitoring Your Credit Report

Brendan Harkness

Brendan Harkness

Updated Sep 13, 2016

Your credit report is your financial calling card to potential lenders, so you should always know what that report contains. Errors in your credit report can drag down your credit score and make borrowing money more difficult and expensive.

If there is any unusual or unauthorized activity on your credit report, that could indicate that someone has stolen your identity or committed fraud using your name, which brings a separate set of problems and should be addressed as soon as possible. So, if monitoring your credit report is essential, what is the best way to go about that?

You have two basic options for monitoring your credit report:

  • Do it on your own by requesting your free copies of your credit reports each year.
  • Use a paid service, which will monitor your report on a regular, pre-determined schedule and alert you of any major changes and potential problems.

Q&A Video: What’s the Best Way to Monitor Your Credit?

Do-It-Yourself Credit Reporting Monitoring

Monitoring your credit report on your own requires an ongoing and consistent effort on your part. It also takes some time and requires an organized and disciplined approach.

If you are concerned about fraud and identity theft, and aren’t sure that you can manage monitoring on your own, then hiring a monitoring service may be a better option.

Each of the three main credit bureaus is required to provide you with one free credit report per year. You can use those reports to monitor your credit by requesting a copy of your reports every year. Looking at credit reports can be a bit overwhelming at first because there is a lot of information there, organized into different categories.

You can request a free copy of your credit reports in 3 ways:

Insider Tip: For some help navigating, take a look at our guide: Inside Your Credit Report »

If you decide to monitor your credit report on your own, keep in mind that others are monitoring your financial activity too. Your bank, credit card issuers, and other lenders have a vested interest in making sure there is no fraudulent activity occurring on your cards and accounts. They will often notify you if they see anything unusual occurring with your accounts.

Insider Tip: Looking to get your FICO credit score or an estimate for free? Check out this wiki page for a list of sources, which is maintained by the Reddit community.

Request Your Credit Reports Every Year

For DIY credit report monitoring, consider requesting your free credit reports on specific dates staggered throughout the year.

In the following example of such a schedule, you can request your report from a single bureau every four months, giving you a picture of how your credit has changed throughout the year. You can order the reports from the credit bureaus in alphabetical order to help you remember which bureaus have already sent a report for the year.

Requesting a free credit report every four months from each of the three credit bureaus:

  1. January 1: obtain and review credit report from Equifax
  2. May 1: obtain and review credit report from Experian
  3. September 1: obtain and review credit report from Trans Union
  4. Start over again on January 1 of the next year

If you’re monitoring your own credit, keep an eye out for negative accounts and information and ensure that they are accurate.

Insider Tip: Incorrect items on your credit reports? Learn about removing incorrect collection accounts or paid tax liens.

Hiring a Credit Monitoring Service

Not everyone feels comfortable monitoring their credit report on their own. You may not think it is worth the time and hassle or you may just feel more comfortable letting experts handle it. In that case, you can pay for a credit report monitoring service.

A credit monitoring service usually charges a  monthly fee to keep an eye on your credit report and quickly identify any potentially fraudulent, unusual or questionable activity. There are plenty of credit monitoring services to choose from. All three of the major credit bureaus offer this service, as does MyFICO run by FICO credit score developers Fair Isaac Corporation.

You can also check with your bank or credit union to see if they offer this service. When choosing among these vendors, make sure that your chosen vendor offers a credit reporting monitoring service that covers all three of the major credit bureaus. Another question to ask is how quickly they will notify you if they find suspicious activity.

Each of the credit bureaus also offers their own credit monitoring service, which will alert you about important changes to your credit report. You’ll also have limited access to your credit score. There are a few options, and, depending on the level of service you pay for, all three credit bureaus may be included.

Credit Bureau Monitoring Services

Where Does Credit Report Information Come From?

When you form a relationship with a lender of credit or an issuer of a loan, that information is usually reported to the 3 major credit reporting agencies: Experian, Equifax, and TransUnion. Some types of activity or accounts are considered positive, meaning they improve your credit and cause your credit score to go up; other activity is negative and will harm your credit, causing your credit score to go down.

Different items will remain on your credit reports for different amounts of time, having either a positive or negative effect. It’s important to monitor your reports so you can identify any harmful item and take steps to remove them as soon as possible.

Negative Information on Your Credit Report

In many cases, severe financial setbacks are often the primary cause for credit-damaging delinquencies like late payments, collections, charge-offs, or worse. Recovering from these types of financial setbacks and the credit damaging after affects they leave behind can feel overwhelming. The silver lining, however, is that just because you have bad credit or bad credit scores, it’s not a life long sentence– bad credit doesn’t have to haunt you forever.

As the information in your credit report changes, your credit scores will reflect those changes. In fact, the older negative information gets, the less impact it will have on your credit and credit scores. This is because credit scores place more emphasis on your credit patterns over the last 12 to 24 months.

The key to recovering from negative credit damaging problems is to jump right back into the mix and begin adding new, positive information to your credit reports. It won’t happen overnight but as you continue those new positive payment and credit management patterns, your credit and credit score will gradually improve over time.

The old negative information will remain in your credit reports and continue to impact your credit scores, it just won’t have as much of an impact the older it gets. Most negative information will stay on your credit report for 7 years. There are also some exceptions:

Credit Accounts

  • Negative credit accounts will remain on your credit report for 7 years based on the date of the first missed payment that led to the delinquency.
  • Positive credit accounts, on the other hand, stay on your credit reports for as long as the account remains open and active. Closed accounts in positive standing usually remain for 10 years from the date the account was closed but that’s not based on law, it’s a credit bureau policy.

Collections

  • A collection will remain on your credit report for 7 years from the date the account went into serious delinquent status, typically the date of the first 180-day late payment.
  • The FCRA does not allow collection agencies to “re-age” collection accounts when they are purchased from the original creditor in an attempt to keep a negative account on a credit report longer. If a collection agency tries to re-age an account by manipulating the FCRA compliance date that is illegal.

NOTE: There is no difference between a paid and unpaid collection. Paying a collection does not remove it from your credit reports.

Charge-Offs

  • Accounts with a charge-off status should be purged from your credit reports 7 years from the date the charge-off occurred

Public Records

  • Chapter 7 bankruptcies remain for 10 years from the date filed
  • Completed Chapter 13 bankruptcies remain for 7 years from the date discharged or a maximum of 10 years
  • Judgments remain for 7 years from the date filed. If the judgment is re-filed and thus has a new filing date, it will remain for 7 years from that new date

Tax Liens

  • The purge date for paid tax liens is 7 years from the date the lien was released. Unpaid tax liens have no purge fromdate and can remain indefinitely if the credit bureaus so choose. Withdrawn federal liens are removed immediately

Credit Inquiries

  • Credit inquiries are required by law to remain on your credit report for 2 years. As far as your credit scores are concerned, however, only inquiries within the last 12 months are considered

Repossessions

  • You can expect a repossession to be removed from your credit reports 7 years from the date your auto loan went into default (or 7.5 years from the date of first delinquency on your auto loan that lead to the default)

New York State Residents

  • Satisfied judgments remain for 5 years from the date filed
  • Paid collections remain for 5 years from the date of last activity

California State Residents

  • Paid and released tax liens remain on your credit report for 7 years from the date released
  • Unpaid tax liens remain for 10 years from the date filed

Freeze Your Credit If You Have Security Concerns

If you have serious concerns about identity theft or fraudulent activity, you can place a credit freeze on your credit report as another level of protection.

A credit freeze prevents the credit bureaus from sharing your credit report with any person or entity without your permission. Without a credit report, no one can obtain credit in your name. With a freeze only your existing creditors can access your credit reports and credit scores.

If a lender is not able to access your credit reports and credit scores, there is no way that lender is going to extend new credit, making it essentially impossible for an identity thief to open fraudulent lines of credit in your name and without your knowledge.

You’ll need to unfreeze your credit to let lenders access your report, so a credit freeze adds an extra layer whenever you apply for credit yourself. Unfreezing your credit can take a few days. Freezing your credit reports is relatively easy and inexpensive. Just follow these steps:

1. Request a Credit Freeze with Each Credit Reporting Agency Independently

If you’ve made the decision to freeze your credit reports then it is essential to do so with all three of the national credit bureaus. There is no single, centralized source where you can freeze all three of your credit reports. Thankfully, freezing your reports is fairly easy and the process can be completed online by creating an account with your personal information (see below for links to request credit freezes with each of the credit bureaus).

If you have been a victim of identity theft, you can freeze your account for free. If you haven’t, you can still request a credit freeze but you will have to pay a fee to each of the credit bureaus.The fees will vary from state to state.You can find a list of fees, which will vary from state to state, on each of the credit bureau’s websites. The fees range from $3-$15 per bureau, which is very inexpensive compared to the cost of subscription credit monitoring services.

You can go to these websites or call these numbers to freeze your three credit reports:

Credit Bureau Website Phone Number
Experian Experian Credit Fraud Resources Page 1-888-397-3742
Equifax Equifax Credit Fraud Resources Page  1-800-627-8372
TransUnion TransUnion Credit Fraud Resources Page  1-800-680-7289

2. Keep Your Personal Identification Numbers in a Safe Place

When you freeze your credit reports you will be issued a PIN from each of the credit bureaus. The PIN allows you to log in to your security freeze account and “thaw” your credit reports, thus putting them back into circulation. You’ll need to do this if you plan on applying for credit and want to give lenders access to your credit reports and scores. The credit bureaus may charge a fee to remove the security freeze from your credit reports.

3. Plan Ahead When Applying for Credit in the Future

After you’ve frozen your credit reports it’s important to keep in mind that once you lift your freeze, your reports won’t be available for several days. The credit bureaus recommend that you lift a credit freeze a few days before actually applying for any new credit. In other words, you can’t notify the credit bureaus that you want to lift your credit freezes that morning and head out to the local car dealership the same afternoon.

If you apply for a loan or a credit card while your credit reports are still frozen the lender will not be able to access your credit reports or credit scores. They’ll likely deny your request for credit because of the inability to access your information. Then you’ll find yourself in a position where you’ll have to re-apply again and time the “thawing” of your credit reports a little better.

Credit freezes are the only truly proactive way to protect your credit reports from fraud. However, due to the cumbersome and potentially inconvenient situation a credit freeze might land you in, it’s an option that not many consumers choose. If a credit freeze is not right for you, be sure to check your own credit reports regularly for suspicious activity to guard against identity theft.

Why Is My Credit Card Not Showing up in My Credit Report?

If you’ve checked your credit report(s) and found that a credit card or other account is missing, it could either be an error or your lender may not report to the credit bureaus, although that’s unlikely.

Every lender and creditor has their own reporting policies, but most include some sort of regularly scheduled automatic update that transmits your account information electronically to the credit agencies every 30 days.

Based on the individual lender’s policies, they may report to all three credit reporting agencies, or they may only report to one or two. This is one reason why credit reports and credit scores vary from bureau to bureau.

Are Lenders Legally Required to Report?

What you may not realize, however, is that the credit reporting system is actually completely voluntary. The credit reporting agencies are essentially “data repositories” that accept credit data that is reported by your lenders and creditors. They don’t proactively go and collect this information from your lenders– it’s all based on what your lenders send them, which they do so freely and on their own accord.

Lenders are not legally required by any law, including the Fair Credit Reporting Act, to report account information to the credit reporting agencies and reporting this data comes with additional costs and support requirements.

When a lender reports information to the credit bureaus, they are legally obligated to provide accurate data and must respond to disputes for errors. This requires staffing and additional legal obligations that cost money to maintain and support.

Can I Make a Lender Report My Account?

For the most part, larger major lenders and credit card issuers will report to all three credit bureaus. However, there are instances with smaller lenders or financial providers that don’t.

If your lender isn’t reporting an account, you can always contact them directly to request that they do so. Legally, however, you can’t force your lender to report an account. Unfortunately, if they won’t honor your request, there’s really not much you can do because they aren’t legally obligated to do so.

What Can I Do to Avoid Lenders Who Don’t Report?

One way to avoid this problem is to ask potential lenders up front if they report to all three of the major credit reporting agencies before you make the decision to apply for the loan or financial product. This is a good idea any time you’re shopping for a loan but especially so if you’re working with a credit union.

Credit unions are known for offering better rates and service than larger banks but they’re also much smaller and some may only report to one of the credit reporting agencies. This isn’t to say every credit union works this way, but it’s definitely something to consider the next time you apply for a loan with a credit union.

Should I Add a Consumer Statement to My Credit Reports?

When you learn that an unexpected, negative account has shown up on your credit reports the discovery can be downright infuriating, especially if you believe it to be incorrect. Thankfully you have certain rights when it comes to items appearing on your credit reports with which you disagree.

One of these rights afforded under the Fair Credit Reporting Act (FCRA) allows consumers to dispute accounts, which they believe to be inaccurate, with the three credit reporting agencies (Equifax, Trans Union, and Experian). However, disputes do not always work out in the consumer’s favor.

Often times disputed accounts are verified as accurate by the lender or collection agency. If an account is disputed and the credit reporting agency verifies the validity of the account with the furnisher then the items can continue to legally remain on the consumer’s credit report for up to 10 years, or longer.

The 100-Word Statement

Consumers who have unsuccessfully disputed an item on their credit reports are still legally afforded the right under the FCRA to tell their side of the story, albeit in a very concise manner. The “Statement of Dispute” as it is named in the FCRA, is described as follows:

If the reinvestigation does not resolve the dispute, the consumer may file a brief statement setting forth the nature of the dispute. The consumer reporting agency may limit such statements to not more than one hundred words if it provides the consumer with assistance in writing a clear summary of the dispute.

When written, the 100-word statement will become a part of the consumer’s credit report and will appear whenever his credit report is pulled in the future.

Credit Score Impact

Statements of Dispute, unfortunately for the disgruntled consumer, do not have any impact on a consumer’s credit scores. Consumer statements are not one of the factors considered by FICO, VantageScore or any other credit-scoring model. Therefore, if a consumer has a 640 score due to a collection account with which he disagrees, the consumer statement isn’t going to help or hurt that score at all. There is no way for credit scoring models to read and quantify consumer statements.

Are Statements of Dispute a Good Idea?

It can be very appealing to a consumer to tell his side of the story, especially when he feels like he has been wronged by a creditor or collection agency. Unfortunately, a statement of dispute is unlikely to have any impact whatsoever on a future lender’s decision regarding whether or not they wish to do business with that consumer.

The right to add one of these consumer statements has been around for over 25 years, well before credit scoring and automated underwriting systems. The idea behind the consumer statement was to allow lenders to actually read them while considering your loan applications. Today it’s rare that a lender will actually print and read through your credit reports, so the value of the consumer statement just isn’t there any longer.

Credit granting decisions are largely based on a consumer’s credit scores. If a consumer’s credit scores are too low to meet a lender’s minimum score criteria then that consumer’s credit application is almost certainly going to be denied whether a statement of dispute is present on the credit report, or not.

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