If you pay your bills on time, it’s tempting to believe that you have a good-to-great credit score. However, this isn’t always the case. You’d be surprised to know what’s actually on your report, how this information is being used, and what determines your credit score. Keep reading to discover 12 things that you don’t know about your credit report.

1. Your Credit Report is a Report Card for Adults

When you were a child, your report card was a way for schools to keep your parents abreast of your academic performance and behavior. Now that you’re an adult, your credit report keeps lenders and others abreast of your financial performance and behavior, according to Whitney Lee, associate private CFO at oXYGen Financial in Alpharetta, Georgia. Lee tells Investopedia that this information is also used to predict your future financial behavior. 

“Five components make up your credit score: payment history, credit utilization, average credit age, types of credit, and total number of inquiries. However, payment history and credit utilization account for about 65% of your score,” says Lee.

2. Your Credit Report Doesn't Disappear

The beauty of Snapchat is that any photo you share will disappear in 10 seconds or less, but Lisa Kaess, founder, and producer of Feminomics, a financial advisory firm for women, warns Investopedia readers, “Your credit report is not Snapchat—your payment history lasts for years.” Although credit reports typically go back two years, Kaess says that it is not uncommon for reports to contain data that dates back much further.


What Is A Credit Score?

3. Your Credit Report is Used for More Than Lending

Even if you’re not applying for a loan, Kaess says your credit report may be viewed by landlords, prospective employers, and other individuals and organizations who are trying to predict your level of trustworthiness.

For example, insurance companies use credit reports to determine how much of a risk you’ll be and how likely you are to file a claim.

4. Your Credit Report May Be Inaccurate 

Your credit report may contain a variety of errors. For example, it may show a debt that you never owed or one that you paid off directly–and these errors can negatively impact your score, according to Randy Padawer, Consumer Education Specialist at Lexington Law Firm in North Salt Lake, Utah.

Padawer tells Investopedia that thousands of people have lower credit scores as a result of unfair and inaccurate collection accounts. “Either because of clerical errors, miscommunications, or even untoward tactics by some collection agencies, these types of accounts are among the most common problems we see within credit reports,” says Padawer.

Your credit report may also reflect outdated information. “It could link you to a former spouse or partner out of your life for years,” says Kaess, who recommends contacting all three credit bureaus to dispute and correct erroneous information.

5. Your Credit Report May Reveal Identity Theft

By far the worst thing that you can find on your credit report is evidence of fraudulent activity, and Padawer says it can cause the most damage. “Seeing an unfamiliar account can signify that mistakes are contained within your report or you have been the victim of identity theft.” And if it’s the latter, Padawer says a thief may have accessed your account information and your Social Security number. He recommends contacting your credit provider immediately and even implementing a security freeze to stop anyone from opening a new line of credit in your name.

6. Your Credit Report Takes a Hit From Hard Inquiries  

A hard inquiry occurs when a lender checks your credit report to determine if it will extend credit to you, compared to a soft inquiry, which occurs when you check your score, or when a company checks it for advertising purposes. Scott Smith, President of CreditRepair.com, tells Investopedia that many people don’t know that difference between the two.

“Most consumers are unaware that renting a car, for instance, can cause a credit score to take a dip,” says Smith. In addition, Smith says that when applying for a mortgage, credit card, cell phone service, or any other type of financing, the lender will likely look at the individual’s borrowing history. Since hard inquiries can lower your credit score, do your part to avoid them. “Put cash deposit down when entering a new agreement with a utility provider, and use a credit card when renting a car,” advises Smith.

7. Your Credit Report Contains Those Unpaid Library Fines 

You know the importance of paying your bills on time. According to Smith, 35% of your score is based on your payment history and those late credit card payments and outstanding medical bills can pull your credit score down. However, Smith says many Investopedia readers would be surprised to learn that library fines, traffic tickets, and other bills that you consider “insignificant,” could also negatively impact your credit report. 

8. Your Credit Report Can Suffer from a 50% Credit Card Balance

You probably know that your credit cards shouldn’t be maxed out, or even remotely close to the limit, but your balance can be a lot less than your limit and still damage your credit report.

Margie Shard, CEO, and Wealth Advisor at Shard Financial Services in Fenton, Michigan, tells Investopedia, “If you have a balance of over 50% of your available credit line on a credit card, your credit score gets lowered." However, having "at least 50% available credit will make your credit score go up,” notes Shard.

Shard also says that having too many credit cards with balances can hurt your credit. She recommends consolidating them into one installment loan with a repayment schedule to help improve your credit score.

 Ali Vafai, the president of The Money Source in San Francisco, advises Investopedia readers to be even more disciplined and diligent. Vafai says consumers should not use more than 30% of their available credit. “Even if you pay off your entire balance each month, the snapshot of your credit is taken at different times during the month.” 

9. Your Credit Report Needs Those Old Accounts 

While it’s a good idea not to have a lot of open accounts, there’s a method to deciding which ones to close. According to Vafai, you should never close your oldest account–even if it’s a small account. “One of the primary factors for determining your credit score is the length of time you’ve had the account, so keep the oldest accounts open.”

10. Your Credit Report Doesn't Need a Flurry of Activity

It’s important to space your credit applications accordingly. Vafai warns against applying for more than two accounts during any 90-day period. He says that every time you apply for credit, your score drops for at least 90 to 180 days. Also, if you want to get a car, buy a house, or get another type of big-ticket item, Vafai warns against applying for anything for at least six months.

11. Your Credit Report Prioritizes Mortgage and Auto loans

Your credit report pays more attention to some items than it does others. For example, your auto and mortgage payment history count more than your credit card payments. “If something happens and you can’t pay all of your bills, pay your mortgage and auto first,” advises Vafai.

12. Your Credit Report May Not Like Cosignatures

First the good news: when parents add their children as authorized users on credit cards, Vafai says that the kids get the length of time for good credit. However, he says never to cosign for anyone unless they are capable of paying the entire balance due. Once you cosign, Vafai says you are also responsible for that debt, and it impacts your credit.

The Bottom Line

A good credit score is essential to securing a mortgage or obtaining a car, and it may also determine the terms of a loan. Consumers would be wise to remember that a credit report is a report card for adults, and their financial performance and behavior are being graded.