We all get worried about our Credit Report history when we make a money mistake. We think, “Oh no, what will this do to my score?” Finding out exactly what makes a credit report work for you can be challenging. It is tough to know what’s what when it comes to determining what works for you and what doesn’t. A number of things can negatively impact your credit score, including late payments (even by one day! ), credit history.

Your credit report plays a big part in a lot of things; Whether lenders will approve you for any sort of loan, a new credit card, a new apartment, or any other kind of loan.

Listed below is how to understand your credit report so you won’t be fooled when it comes to what to do if it’s not looking good.

Step one: Get a free credit report

Any one of the three major credit bureaus will supply you with your credit report for free. ( Equifax, Experian, and TransUnion )

You will get a number from at least one (and sometimes both) of the two most popular credit scoring systems. FICO Score and VantageScore. Both use formulas that assign your credit a number between 300 and 850, with 850 being the highest.

As VantageScore and FICO Score use different proprietary formulas, there might be a slight difference in your score, but it usually amounts to only a few points for most people.

Step two: Review your personal information

To ensure the report you’re reading is actually yours, your credit report will normally list some basic information. This is useful when you’re trying to protect yourself from identity fraud. You’ll find any variations of your name that you’ve used in the past. This can include maiden names and nicknames, as well as any addresses that you’ve lived at.

There’ll also be your social security number visible and your birthday. Likewise, it will include information about any employers you might have listed on credit applications.

There is no impact on your credit score from the information contained in this section of your credit report.

Step three: Review your “credit history and accounts” section

A credit report’s biggest, most overwhelming part is its line of credit section. This section contains all of your lines of credit and credit cards you’ve opened within the past decade.

Here you can also see your credit utilization ratio, which is the ratio of your total debt compared to your credit limit. This is the most important part of your report. (Remember: No matter what your combined credit limit is, it’s best if you try to keep your usage under 30%).

As well, you’ll be able to view your payment history. This will include any debts you have closed and any debts you have paid off in the last decade. You’ll find information on your report about whether you are current with your payments for each mortgage, car, and student loan, as well as any late or missed payments.

Additionally, you will find any accounts that you are authorized to access here. It includes also the balance of the home equity line of credit as well as what you owe on it. Your credit history will be crystal clear since all of these lines of credit include the exact dates that the accounts were opened and closed.

Besides making note of who closed each account, it will also state whether it was a creditor you failed to pay on time, or if you closed it on your own while maintaining good standing.

All of these factors contribute to your credit score, both good and bad.

Step four: Identify any negative info

The “negative information” section, sometimes listed as “public records,” shows a summary of all the information that will lower your credit score. For example, red flags like bankruptcy, foreclosures, and repossessions.

Almost all of the data listed here could harm your score, but most bad marks go away after seven years. Personal bankruptcy, on the other hand, will stay on your credit report for 10 years.

In addition to your credit inquiries, this section will include a list of all the hard inquiries you have made. Since hard inquiries provide a clue to creditors that you are seeking more credit, this is another red flag.

Soft inquiries are those that come from checking your own credit — many banks offer this service for free via their website or apps — or when you allow another person to do so, like your current landlord. Your credit report will also show these types of inquiries, but they will not affect your score.

Step five: Make sure any errors are corrected

If you encounter any problems with any of the steps listed above, even if it seems as minor as an incorrect postal code on an old address, contact the credit bureaus and the lender (such as your credit card company or your student loan lender), and ask how the error can be corrected.

It will take an official dispute letter to correct a more serious error, like accounts that have been incorrectly reported as past due.

You will want to get this sorted out right away since negative information can harm your ability to qualify for a credit card, the number of loans you get approved for, or the credit limits you get approved. You can do exactly that by following this guide.