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A credit report is a summary of your financial journey.

It gives lenders a clear picture of how effectively you have handled your money in the current and past times.

Needless to say, it works like a permit to earn you a good interest rate, better debt terms, and a low mortgage price.

But what exactly is included in your credit report? How does it work? How do you get one??

And what if your credit report is full of errors? Do credit inquiries make it worse?

Read the complete guide to find the answers.

Basics Of A Credit Report

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A credit report is a record of your credit history.

It is curated when you submit a credit card or loan application.

The data needed to create the report is provided by the lenders to Canada's top credit reporting agencies.

What’s On A Credit Report?

From nothing to everything, you name it, and the report has it.

It’s like a detailed script of your bad financial decisions and good behavior.

So, if you simply put what are the 5 main things on your credit report, here’s the answer:

Your FICO or Equifax credit score is calculated using the following 5 things:

Your debt-to-credit ratio, payment records, credit accounts age, credit mix, and application of your new credit.

Generally, a credit report can be categorized into 4 parts: Public records, personal data, credit accounts history, and inquiries (soft or hard).

Let’s read everything included on your credit report in detail:

1.  Personal Data

Your credit report will have a record of all your personal information. For instance, the following data is included in the list:

• Name (first, middle, last)
• DOB (date of birth)
• SIN (equivalent to SSN)
• Address (residing and previous)
• Phone number
• Employers (current and past)

It also includes any misspelled name, wrong number, or other data referred to as a credit report error.

2.  Credit Accounts

This category includes all the information related to your credit accounts.

The lenders provide the data to the bureaus, which then use the record to calculate your credit score.

• Revolving credit,
• Credit mix,
• Credit cards,
• Mortgage, installment, insurance, loans, etc.

All types of credit accounts are included in your report.

Moreover, it also contains the following:

• Recent and previous payment history,
• Creditor information,
• Open credit,
• Account numbers,
• Outstanding balances (positive or negative balance)

This category also covers your due, late, or missed payment information.

Moreover, it will also show the status of your accounts.

3.  Public Records

As the name suggests, it is any data available to the public.

For instance, if a lender searches for it, he will easily see the information online without actually requesting a credit check.

• Bankruptcy,
• Lawsuits,
• Unpaid debt payments (due for a long time)

All these are recorded on your credit report. However, it’s not the end of the world!

Here’s how you can remove public records from your credit report:

4.  Credit Inquiries

It is exactly what it sounds like!

An inquiry on your name or financial information. Don’t worry! Not everyone can do that.

For instance,

• When you apply for a secured credit card or when you submit an application for a loan,
• The lender can request the bureaus to run a credit check on you.

In other words, the lender is asking to see your credit report.

It can be done to review your Equifax credit score, payment history, previous records, etc.

When the request is initiated, an inquiry is generated, which will appear on your credit report.

Inquiries are usually of two types: Soft inquiry and Hard inquiry.

Let’s discuss them in detail:

Understanding Credit Inquiries On Your Report

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As we said earlier in the blog, an inquiry is initiated when a credit check is requested.

Now it can be due to a lender or yourself! That’s what makes it a hard or soft inquiry. And the effect of both can be different on your credit score.

1.  Hard Inquiry

Hard inquiries cover credit card or loan application checks.

When you apply for a card, insurance, or loan, the lenders request a credit check which appears as a hard inquiry on your report.

• A hard inquiry won’t hurt your score!
• But if you apply for 3 to 4 cards in a 2 to 3 month span, it can be a problem.
• In fact, it might also cause a dip in your credit score.

A hard inquiry will stay on your report for at least 2 years!

However, it isn’t an alarming thing. You are good to go as long as you clear your card bills and adopt good financial resolutions.

2.  Soft Inquiry

A soft inquiry is initiated when a lender or an authorized person runs a credit check to offer you promotions, new lending programs, etc.

The purpose isn’t to lend you money but to promote their products.

• Your landlord might run a check to decide your lease payment or security deposit.
• Your existing credit card company can review your score to offer you a new service.
• Your vehicle insurance might run a check to set your rates.

As the name suggests, it works as a soft check and won’t impact your credit score negatively.

Bonus Information: Only hard inquiries are visible to lenders.

How To Manage Credit Inquiries?’

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A soft inquiry isn’t a threat to your credit score, but a hard inquiry surely is.

So, knowing how you can manage inquiries or even remove them to set your credit report again is evident.

As it’s your key to living a life full of financial freedom!

Here are some effective tips:

1.  Avoid Back-to-Back Inquiries!

Are you thinking of applying for a new card? Think again!

It’s important because when you submit two or more credit card applications within a short period, your report will have two or more new hard inquiries.

Now, if it’s one, it can be settled.

But continuous hard inquiries will give the banks or lenders an idea that you are struggling to manage your finances.

See: How Applying For Multiple Credit Cards Can Hurt Your Credit Score?

2.  Find The Errors & Dispute Them!

A 4 to 5 point reduction might not seem like much!

But once you get into the habit of doing it, you won't even notice when it might bring your score down from decent to poor.

Jordan Tarver, a finance writer, explains that there are two things when it comes to removing a hard inquiry from your credit report.

1. You can either wait 12 months to let the inquiry fall off your credit report,
2. Or, thoroughly analyze your credit report and see if there’s any unauthorized activity you can dispute.

However, if you do find one, alert your card provider about it. But also remember to submit a dispute to credit bureaus.

Who Can Run A Credit Check On You?

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Anyone with a credit card once thought about this: who can view my credit report?

Well, to put it in simple words: lenders, banks, employers, and yourself.

So, can any random person request access to your report?

The FCRA has a strict policy to allow only legal authorities to review any information on your credit report.

Now the next thing that comes to mind is:

Can someone review your credit report without your permission?

The answer is 50-50.

Some might be able to do that, while others may require your permission to do so. Here’s everything you need to know about credit report access permissions.

● People Who Need Permission

The lender, loan provider, insurance agent, and any mortgage broker you submitted an application to.

Your user application works as permission, allowing them to review your credit report.

Moreover, your employer will also need a written or signed paper granting them access to your report.

● People Who Don’t Need Permission

Some authorized persons can review your credit report without your consent. For instance,

• The company you will do business with,
• A court that has information on your lawsuit or unpaid debt,
• Investors or alternative lenders,
• Government authorities etc.

However, there is no hidden information about it.

You can see who checked your credit report in the inquiries section on your credit report.

Bottom Line

Checking your credit report is important for so many reasons!

But what’s the point of doing so when you are not familiar with the basics of it?

You don’t know what to look for when reading the report, you don’t understand the credit terms used, and you don’t know what inquiries mean for your score.

Not anymore!

After reading this guide, you can learn everything about your report and how inquiries work.

So, what are you waiting for? Go do it now!