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How To Read Your Credit Report

Knowing your credit score is important to maintaining financial health and awareness. It's recommended that you pull your credit score at least once per year to check for any changes or errors. But it's not as easy as it seems: it's a wealth of information on 5+ pages - and it can be difficult to digest unless you have a guide.

We're on a mission to empower students with financial clarity. Let us be your guide to understanding how to read your credit report.

HOW DO I GET MY CREDIT REPORT?

You can pull your score once per year for free using AnnualCreditReport.com. Note: This is the only free hard credit service authorized by the federal government. Every other third-party provider will come with an additional fee.

To check your score in between annual pulls, there are a number of services like Credit Karma that are available for both hard- and soft- credit checks.

THE SECTIONS OF YOUR CREDIT REPORT

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1. PERSONAL INFORMATION

Here you'll find all your identifying information, including your name, previous and current addresses, birth year, social security number, previous and current employers and any phone numbers associated with your name.

2. PUBLIC RECORDS

There are three types of public record that can appear on your credit report: bankruptcies, tax liens, and civil judgments. Criminal information (such as misdemeanors and arrests) do not appear on your credit score.

3. ACCOUNTS

Unless you are very new to building credit, your "accounts" section will be the largest and weigh most heavily on your score. Financing accounts such as credit and debit accounts, as well as installment loans like student loans, personal loans, and mortgages will appear here. Each of the accounts will typically be categorized as either open, negative or closed.

4. Credit Inquiries

There's a fine line between checking your credit too often, and not checking it often enough. Every time someone "hard checks" your credit, the inquiry displays on your credit score, and it impacts your credit.

SO YOU HAVE A LOW CREDIT SCORE. HOW CAN YOU FIX IT?

1. Add a credit mix. Instead of applying for five secured credit cards, instead try to create a "credit mix" by applying for different types of credit. For example, have a car loan, home loan and credit card.

2. Make on-time payments. This doesn’t mean just your credit cards – also keep track of your car payments, utility bills and medical bills. If you don’t pay your bills, they will be sold to a collection agency, which will deduct points from your credit score. Sign up for autopay when you can, or set payment reminders for yourself.

3. Resolve collections and billing issues. If something on your credit report doesn't seem right, you can contact the credit bureau to get it removed.

FURTHER READING