Chapter 5. What's in a credit report?
A credit report is updated systematically to include all new activities and financial history. Each agency adopts its own schedule and frequency of updating information, so three available reports may have some slight differences each other. Still, however, all three agencies eventually capture the same information including your identity, accounts, and inquiries.
What information does each agency capture?
To check out your report, you are legally entitled to receive a free copy of your credit report once a year from each of the three credit reporting agencies. Getting your FICO score is not free, but it will allow you to make sure your free report is correct and your identity is intact. You do not have to get all three reports at the same time. You can space them out and get one at a time each calendar year.
What should you watch for?
What you need to remember is that every credit card you open gets recorded in your history and credit report. It includes department store credit cards, bank cards, travel cards, gas cards, and so on. All positive information remains indefinitely on your report, such as good credit history of paying on time and paying in full. All negative information (such as late payments, reorganization of debt, liens, foreclosures, etc.) age-off after 7 years. Bankruptcy remains for 10 years. Child support and defaults on student loans are reported until satisfied. (Check out our Student loans module in our series for additional assistance.)
How to
The best tip is not to open a credit card unless you are serious about having that particular card and intend to keep it for a long time. Do NOT be seduced by rewards and token gifts to get you to open a credit card. Ask yourself if you really NEED another free promotional umbrella?
So, suppose that you already decided that you need a credit card to establish a credit history, generate a credit report, and receive a FICO Score. Check out the checklist below to get some tips for controlling credit card debts.
You can also check out the Debt management module in this MoneyCounts Series to learn more about how to manage debt including credit card debts.
Practice
Now that you have all the information you need to proceed with getting a credit card, think of paying it forward and teach a friend or a family member how to wisely choose a credit card.
Congratulations! Now Test your knowledge about Credit cards!
Would you like to review again? You can start over at Introduction.
If you want to see the entire module of Credit cards, click here.
The Penn State Sokolov-Miller Family Financial and Life Skills Center hopes you have enjoyed this module in the MoneyCounts: A Penn State Financial Literacy Series. Please tell us how we can serve you better, leave us feedback, ask a question, or request additional information at: finlit@psu.edu