Your credit report is a snapshot of your financial management history, showing both positive and negative aspects of your ability to manage credit. If your credit isn't perfect, you might suffer in the short term; but over time the negative marks will drop off your credit report, enabling you to start anew. The various parts that comprise your credit report are reported for varying lengths of time.
General Account Information
Your credit report shows all of your open credit accounts, including the terms of your agreements, your interest rates, payment history, current balance and credit limits. Closed accounts are also detailed if the last payment on the account has been made within the past 10 years and the account was paid in full and as agreed.
Negative Information
Most people are primarily concerned with negative information when they review their credit reports, and with good reason. Negative marks on your credit file can be reported for up to seven years, over which time your credit score will suffer. This information includes late payments and any accounts you've closed out while not paid in full -- for example, a credit card that was charged-off or was settled for less than the outstanding balance.
Bankruptcy
Bankruptcy is the most glaring negative item you can have on your credit report; therefore, it carries the most severe punishment. Should you file for bankruptcy, this will remain on your credit report for 10 years. During this time, it will be very difficult to obtain new credit or purchase an automobile or house.
Inquiries
Each time you apply for credit, or your credit report is pulled with your consent, an inquiry indicator is placed on your credit report. This inquiry remains for the two years following the credit pull. Inquiries are used to determine how much credit you're seeking; a high number of inquiries sends a message that you may pose a significant credit risk, which hurts your credit score.
Disputing Your Credit Report
In 2004, Brian Dakss reported on CBS News.com that 79 percent of credit reports contained errors. If your report contains errors, you may be paying a long-term price for something that isn't your fault. You are entitled to one free credit report from each of the three credit bureaus each year; these reports do not count as inquiries on your report. Review your reports for errors and contact the respective bureaus if you notice any errors. If your appeals are successful, the errors will be removed and your credit score will better reflect your actual credit worthiness.
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