Building a

Federal Trade Commission | consumer.ftc.gov

report

credit
Shopping for a car?

Applying for a job?

Looking for a home?

Getting your financial house in order?

It’s time to check your credit report.
Building a Better Credit Report

What is a credit report?....................................................................2

Why should I check my credit report?.......................................2

How do I get my credit report?.....................................................2

How do I correct errors on my credit report? .........................3

How long can negative information stay on 

my credit report?................................................................................5

How can my credit report affect my job application?..........6

What is a credit freeze?...................................................................6

What is a fraud alert?........................................................................8

What is a credit score?.....................................................................9

What are my options for dealing with debt?...........................11

Got bad credit? 

Steer clear of credit repair scams................................................12

For more information........................................................................13
1

What is a credit report?

A credit report includes information on where you live, how you 

pay your bills, and whether you’ve been sued 

or have filed for bankruptcy. Nationwide credit 

reporting companies sell the information in your 

report to creditors, insurers, employers, and 

other businesses that, in turn, use it to evaluate 

your applications for credit, insurance, employment, or renting a 

place to live.

Why should I check my credit report?

Some financial advisors and consumer advocates suggest that you 

review your credit report several times a year. Why?

● The information in it affects whether you can get a loan — and 

how much you will have to pay to borrow money.

● To make sure the information is accurate, complete, and up-todate before you apply for a loan for a major purchase like a 

house or car, buy insurance, or apply for a job.

● To help repair possible identity theft. Identity thieves may use 

your information to open new credit accounts in your name. 

Then, when they don’t pay the bills, the delinquent account is 

reported on your credit report. Inaccurate information like that 

could affect your ability to get credit, insurance, or even a job.

How do I get my credit report?

By law, you’re entitled to a free copy of your credit report from 

each of the nationwide credit reporting companies — Equifax, 

Experian, and TransUnion — once every 12 months. To order, visit 

annualcreditreport.com or call 1-877-322-8228.
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You may order reports from one, two, or all three of the companies 

at the same time, or you may stagger your requests. Some 

financial advisors say staggering your requests during a 12-month 

period may be a good way to keep an eye on the accuracy and 

completeness of the information in your reports. If you’re getting 

ready to apply for a loan or job, you might want to check all three 

reports at the same time.

To learn more, read Free Credit Reports at consumer.ftc.gov.

How do I correct errors on my 

credit report?

Both the credit reporting company and the information provider 

(that is, the person, company, or organization that provides 

information about you to a credit reporting company) are 

responsible for correcting inaccurate or incomplete information in 

your report once you bring it to their attention. Letting them know 

involves two steps:

Step One

Tell the credit reporting company, in writing, what information you 

think is inaccurate.

A sample dispute letter is at consumer.ftc.gov. Your letter should 

identify each item in your report you dispute, explain why you 

dispute the information, and ask that it be removed or corrected. 

Include copies (NOT originals) of documents that support your 

position. You may want to enclose a copy of your report with 

the items in question circled. Send your letter by certified mail, 

“return receipt requested,” so you can document what the credit 

reporting company received. Keep copies of your dispute letter 

and enclosures.
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Credit reporting companies must investigate the items in question 

usually within 30 days, unless they consider your dispute frivolous. 

They also must forward all the relevant data you provide about the 

inaccuracy to the information provider, which reviews the relevant 

information, investigates, and reports the results back to the credit 

reporting company. If the information provider finds the disputed 

information is inaccurate, it must notify all three nationwide 

credit reporting companies so they can correct the information 

in your file.

What happens after the investigation?

When the investigation is complete, the credit reporting 

company must give you the results in writing and a free copy of 

your report if the dispute results in a change. If an item is changed 

or deleted, the credit reporting company cannot put the disputed 

information back in your file unless the information provider verifies 

that it is accurate and complete. The credit reporting company also 

must send you written notice that includes the name, address, and 

phone number of the information provider.

If you ask, the credit reporting company must send notices of 

any corrections to anyone who received your report in the past 

six months. You can have a corrected copy of your report sent 

to anyone who received a copy during the past two years for 

employment purposes.

What if the investigation doesn’t resolve my dispute?

Ask that a statement of the dispute be included in your 

file and in future reports. You also can ask the credit reporting 

company to provide your statement to anyone who received a 

copy of your report in the recent past. Expect to pay a fee for 

this service.
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Step Two

Tell the information provider, in writing, that you dispute an item in 

your credit report.

A sample dispute letter is at consumer.ftc.gov. Include copies (NOT

originals) of documents that support your position. If the provider 

listed an address on your credit report, send your letter to that 

address. If no address is listed, contact the provider and ask for the 

correct address to send your letter. If the information provider does 

not give you an address, you can send your letter to any business 

address for that provider.

What if the provider continues to report the disputed 

item to a credit reporting company?

The provider must let the credit reporting company know about 

your dispute. And if you are correct — that is, if the information you 

dispute is found to be inaccurate or incomplete — the information 

provider must tell the credit reporting company to update or delete 

the item.

To learn more, read Disputing Errors on Credit Reports at 

consumer.ftc.gov.

How long can negative information stay 

on my credit report?

A credit reporting company can report most accurate negative 

information for seven years and bankruptcy information for 10 

years. There is no time limit on reporting information about criminal 

convictions; information reported in response to your application 

for a job that pays more than $75,000 a year; and information 

reported because you’ve applied for more than $150,000 worth 

of credit or life insurance. Information about a lawsuit or an unpaid 
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judgment against you can be reported for seven years or until the 

statute of limitations runs out, whichever is longer. The standard 

method for calculating the seven-year reporting period starts with 

the date that the event took place.

How can my credit report affect my 

job application?

When you apply for a job, employers look at the application you 

complete and the resume you prepare. Some employers also 

check into your background before they hire you. Depending 

on the employer and the job, that background information might 

include your employment history, your driving record, criminal 

records, and your credit report.

An employer must get your permission before asking for a report 

about you from a credit reporting company or any other company 

that provides background information. If you don’t give your okay, 

your application for employment may not get a second look. That’s 

up to you. But if you don’t get the job because of information in 

your report, the employer has some legal obligations: First, the 

employer must show you the report; second, the employer must 

tell you how to get your own copy. The report is free if you ask for it 

within 60 days of learning the bad news.

To learn more about your rights, read Employment 

Background Checks at consumer.ftc.gov.

What is a credit freeze?

A credit freeze, also known as a security freeze, lets you restrict 

access to your credit report, which in turn makes it more difficult 

for identity thieves to open new accounts in your name. That’s 

because most creditors need to look at your credit report before 
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approving a new account. If they can’t see your file, they may not 

extend the credit.

You may want to place a credit freeze on your credit reports if 

you’re concerned about the potential consequences 

of data breaches.

To place a freeze on your credit reports, contact 

each of the nationwide credit reporting companies:

Equifax — 1‐800‐525‐6285; equifax.com

Experian —1‐888‐397‐3742; experian.com

TransUnion — 1‐800‐680‐7289; transunion.com

You’ll need to supply your name, address, date of birth, Social 

Security number and other personal information. Fees vary based 

on where you live; they commonly range from $5 to $10.

A credit freeze does not:

● affect your credit score

● prevent you from getting your free annual credit report

● keep you from opening a new account, applying for a job, 

renting an apartment, or buying insurance. If you’re doing any 

of these, you’ll need to lift the freeze temporarily, either for a 

specific time, or for a specific party, say, a potential landlord or 

employer. The cost and lead times to lift a freeze vary, so it’s 

best to check with the credit reporting company in advance.

● prevent a thief from incurring charges on your existing 

accounts. You still need to monitor all bank, credit card and 

insurance statements for fraudulent transactions.
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What is a fraud alert?

Unlike a credit freeze that locks down your credit, a fraud alert 

allows creditors to get a copy of your credit report as long as they 

take steps to verify your identity. For example, if you provide a 

telephone number, the business must call you to verify whether 

you are the person making the credit request. Fraud alerts may be 

effective at stopping someone from opening new credit accounts 

in your name, but they may not prevent the misuse of your existing 

accounts. You still need to monitor all bank, credit card and 

insurance statements for fraudulent transactions.

There are three types of fraud alerts:

Initial Fraud Alert

If you’re concerned about identity theft, but haven’t yet 

become a victim, this fraud alert protects your credit from 

unverified access for at least 90 days. You may want to place 

a fraud alert on your file if your wallet, Social Security card, or 

other personal, financial or account information are ever lost 

or stolen.

Extended Fraud Alert

For victims of identity theft, an extended fraud alert protects 

your credit for seven years.

Active Duty Military Alert

For those in the military who want to protect their credit while 

deployed, this type of fraud alert lasts for one year.

To place a fraud alert on your credit reports, contact one of the 

nationwide credit reporting companies. A fraud alert is free. You 

must provide proof of your identity. The company you call must 
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tell the other companies; they, in turn, will place an alert on their 

versions of your report.

To learn more, visit ftc.gov/idtheft.

What is a credit score?

Credit scoring is a system creditors use to help determine whether 

to give you credit. It also may be used to help decide 

the credit terms you are offered or the rate you will 

pay for the loan.

Information about you and your credit experiences, like your billpaying history, the number and type of accounts you have, whether 

you pay your bills by the date they’re due, collection actions, 

outstanding debt, and the age of your accounts, is collected from 

your credit report. Using a statistical program, creditors compare 

this information to the loan repayment history of consumers with 

similar profiles. For example, a credit scoring system awards points 

for each factor that helps predict who is most likely to repay a debt. 

The total number of points — a credit score — helps predict how 

creditworthy you are: how likely it is that you will repay a loan and 

make the payments when they’re due. A higher credit score is 

taken to mean you are less of a risk, which, in turn, means you are 

more likely to get credit or insurance — or pay less for it.

What factors affect my credit score?

Credit scoring systems are complex and vary among creditors or 

insurance companies and for different types of credit or insurance. 

If one factor changes, your score may change — but improvement 

generally depends on how that factor relates to others the system 

considers. Only the business using the system knows what might 
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improve your score under the particular model they use to evaluate 

your application.

Nevertheless, scoring models usually consider the following 

types of information in your credit report to help compute your 

credit score:

Have you paid your bills on time?

You can count on payment history to be a significant factor. If 

your credit report indicates that you have paid bills late, had 

an account referred to collections, or declared bankruptcy, it 

is likely to have a negative effect on your score.

Are you maxed out?

Many scoring systems evaluate the amount of debt you have 

compared to your credit limits. If the amount you owe is close 

to your credit limit, it’s likely to have a negative effect on your 

score.

How long have you had credit?

Generally, scoring systems consider your credit track record. 

An insufficient credit history may affect your score negatively, 

but factors like timely payments and low balances can 

offset that.

Have you applied for new credit lately?

Many scoring systems consider whether you have applied for 

credit recently by looking at “inquiries” on your credit report. 

If you have applied for too many new accounts recently, it 

could have a negative effect on your score. Every inquiry 

isn’t counted: for example, inquiries by creditors who are 

monitoring your account or looking at credit reports to make 

“prescreened” credit offers are not considered liabilities.
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How many credit accounts do you have and what

kinds of accounts are they?

Although it is generally considered a plus to have established 

credit accounts, too many credit card accounts may have 

a negative effect on your score. In addition, many scoring 

systems consider the type of credit accounts you have. For 

example, under some scoring models, loans from finance 

companies may have a negative effect on your credit score.

Scoring models may be based on more than the information in 

your credit report. When you are applying for a mortgage loan, 

for example, the system may consider the amount of your down 

payment, your total debt, and your income, among other factors.

Improving your score significantly is likely to take some time, but 

it can be done. To improve your credit score under most systems, 

focus on paying your bills in a timely way, paying down any 

outstanding balances, and staying away from new debt.

To learn more, read How Credit Scores Affect the Price of 

Credit and Insurance at consumer.ftc.gov.

What are my options for dealing 

with debt?

Many people face a financial crisis at some point in their lives. 

Whether the crisis is caused by illness, the loss of a job, or 

overspending, it can seem overwhelming. But often, it can be 

overcome. Your financial situation doesn’t have to go from bad 

to worse.

If you get into financial hot water, there are options: credit 

counseling from a reputable organization, debt consolidation, or 
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bankruptcy. Which path works best for you depends on your level 

of debt, your level of discipline, and your prospects for the future.

Contact your creditors immediately if you ever have trouble making 

ends meet. Tell them why it’s difficult for you to pay your bills, 

and try to work out a modified payment plan that reduces your 

payments to a manageable level. Don’t wait until your accounts 

have been turned over to a debt collector. At that point, your 

creditors have given up on you.

To learn more, read Coping with Debt at consumer.ftc.gov.

Got bad credit? 

Steer clear of credit repair scams

You see the ads in newspapers, on TV, and online. You hear 

them on the radio. You get fliers in the mail, email messages, and 

maybe even calls offering credit repair services. They all make the 

same claims:

Credit problems? No problem!

We can remove bankruptcies, judgments, liens, and 

bad loans from your credit file forever!

We can erase your bad credit — 100% 

guaranteed.

Create a new credit identity — legally.

Do yourself a favor and save some money, too. Don’t believe these 

claims: they’re very likely signs of a scam. Indeed, attorneys at 

the Federal Trade Commission, the nation’s consumer protection 

agency, say they’ve never seen a legitimate credit repair 

operation making those claims. The fact is there’s no quick fix for 
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creditworthiness. No one can legally remove accurate and timely 

negative information from a credit report. You can improve your 

credit report legitimately, but it takes time, a conscious effort, and 

sticking to a personal debt repayment plan.

To learn more read, Credit Repair Scams at 

consumer.ftc.gov.

For more information

The FTC works to prevent fraudulent, deceptive and unfair 

business practices in the marketplace and to provide information 

to help consumers spot, stop and avoid them. To file a complaint 

or get free information on consumer issues, visit ftc.gov or call tollfree, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. 

Watch a video, How to File a Complaint, at 

consumer.ftc.gov/media to learn more. The FTC enters consumer 

complaints into the Consumer Sentinel Network, a secure online 

database and investigative tool used by hundreds of civil and 

criminal law enforcement agencies in the U.S. and abroad.
Federal Trade Commission

consumer.ftc.gov

May 2014