Building a Credit History

We know you are working hard to make sure your academic transcript is in good shape.  But another transcript that needs to be in good shape is your financial transcript (credit report).   You start laying the foundation of your credit history the first time you borrow.  


Making History

The three national credit bureaus are Experian, Equifax, and TransUnion.  Think of the credit bureaus as the Registrar's Office.  They collect two types of information about you.  First, they collect information about how you use credit and/or loans.  The bureaus monitor how much you owe on car loans, mortgages, and credit cards.  They also monitor the timeliness of your monthly payments.

The second type of information is public information about you that might influence the way lenders evaluate your creditworthiness. Some of the things this can include are records of bankruptcies, foreclosures , and any court judgments. But credit bureaus will not gather any personal information that is not directly credit-related.  So they will not monitor how much you spend on rent, or utilities, or anything you pay for in cash. Also, a credit report will not show age, sex, race, income, or checking/savings balances.


Who is looking at my Credit Report?

You might be surprised.  Basically, any entity with a permissible financial purpose can look at it.  Credit bureaus make the information they've collected available (at a price) to creditors, banks, credit card companies, potential employers, insurance companies, and  landlords.  Even potential employers may request to look at your credit report as part of the job application process.  Most information remains on your report for a number of years, and damaging details can continue to appear for up to seven years even if the account is closed or inactive. In Michigan bankruptcies will stay on your report for up to ten years.


How can I see my Credit Report?

Because of the Fair and Accurate Transaction (FACT) Act, you are entitled to one free copy from each of the credit bureaus each year.  The federal government established a website to obtain a FREE copy of your credit report.  Or you can call (877) 322.8228.  It is a good idea to order your report to ensure the accuracy of the information being reported.  Since you own the data, you want it to be correct.   If there are errors on it, contact the credit bureau and they will file a dispute with the creditor.  Because each of the reports covers essentially the same information, it makes sense to request them one at a time — say one in January, one in May, and one in September. That way, you'll catch any problems early.

Note:  Other sites with catchy jingles may offer a free report, but you may be required to sign up for other services. 


Page last modified February 27, 2013