What Gets Reported to Credit Agencies — and What Doesn’t

Financial Wellness By Noah - May 13, 2020

Managing your credit is an essential part of your overall financial health. Creditworthiness affects your ability to get a loan or participate in other financing agreements. You’ll make more confident plans for your future if you start with a solid understanding of what appears on your credit report, and what doesn’t.

What Is a Credit Score?

Most of us have at least a basic understanding of what a credit score is, but there’s no harm in a quick refresh. Simply put, a credit score is a 3-digit number, usually between 300 and 850, that represents your relationship with credit. The higher your score, the more creditworthy you appear to lenders.

There are a few different models for calculating credit scores. FICO is the most common credit score, used by around 90% of lenders. VantageScore is FICO’s main competitor, and credit bureaus may use their own scoring model as well. Equifax uses VantageScore and also calculates credit using its own 280-850 point scale. Other bureaus may use both FICO and VantageScore, or another combination of models. The most recent version of FICO breaks down like this:

  • Payment history (35%): Your record of paying credit bills on time
  • Credit utilization (30%): How much you currently owe credit lenders
  • Credit history (15%): How long you’ve held credit accounts
  • New credit (10%): How many new accounts or applications you have
  • Types of credit (10%): Profile of what kinds of loans you have (mortgage, credit cards, etc.)

Your VantageScore uses the same categories, but credit utilization and types of credit you’ve held over time matter more than payment history.

Three credit bureaus collect information for your credit report: Equifax, Experian, and TransUnion. You’re entitled to check your full credit report, which lists detailed information about your credit habits, once per year. Part of the reason it’s worthwhile to request your credit report each year is to review for inaccuracies or fraudulent entries, and dispute them to protect your credit.

What Is a Good Credit Score?

When you apply for a loan or even a new job, the process might include a credit inquiry. Lenders set their own standards for what they consider excellent, good, and subprime credit. Typically, these guidelines are a good starting point:

  • Excellent: 800 or higher (some lenders offer their best rates for scores over 760, according to some experts)
  • Very good: 750 or higher
  • Good: 700-750 (you should consistently qualify for good rates at this level, but not the very best)
  • Fair/good: 650-700 (you’re slightly below national average here, but qualifying shouldn’t be a problem)
  • Fair: 600-650 (the best rates are out of reach, and qualifying may become an issue with stricter lenders)
  • Subprime: Below 600 (at this level, repairing credit should be a financial focus for you)

The credit you need to qualify for a mortgage depends in part on your area. Homeowners on the West Coast or the Northeast regions of the U.S. may need a 700 credit score to offer a competitive profile. People living in certain parts of the South can get by with a score around 670, or even lower.

Where Does the Information on a Credit Report Come From?

Some information on your credit report comes from public records, such as property records. Most of the information likely comes directly from the creditors. Banks, credit card providers, automobile financing businesses, and other creditors report information to the three credit bureaus.

What are the major areas on information included on your credit report?

Credit reports can vary between credit bureaus, but these are the categories of information a credit report includes:

  • Personal information: Your full name, date of birth, address, SSN, and possibly employment history
  • Credit history: Account opening date, credit limit or loan amount, monthly balance, and payment history
  • Credit inquiries: Hard inquiries are credit checks from a financial institution to consider an application. They can result in a temporary dip in your credit score. Soft inquiries aren’t connected to an open application, so they don’t affect credit and may not appear on your report at all.
  • Public records: Tax records, bankruptcy filings, property records, and other public records can affect your credit.
  • Personal statement: Some credit reports offer the opportunity to provide a personal statement to provide context (usually for a negative entry on your report). If the coronavirus pandemic leads to a credit card delinquency, for example, that might be worth noting so future lenders understand what happened.

What do banks see when they do a credit check?

When a bank (or another potential lender) runs a credit check, they can view the above information. Banks and others checking your credit won’t see your income. They can see your credit history, but only on a monthly basis. That is, they can see what your balance was, but not individual purchases. So if you’re paying bills on time, you don’t need to worry that eccentric purchases like an epic rubber-duck collection will give lenders pause.

Hard credit inquiry vs. soft inquiry

Checking someone’s credit can be either a hard inquiry or a soft inquiry. Soft inquiries don’t affect your score and are normally only visible to you. Hard inquiries do cause a slight dip in credit score, and they stay on your report for two years.

Soft inquiries happen when you check your own credit, if you get pre-approved for a credit card offer, or sometimes when an employer includes credit checks in the hiring process. When a lender checks your credit as part of the process to approve you for a loan or other financing, this results in a hard inquiry.

Basically, the reason why a credit pull registers as a hard inquiry is because it’s tied to an active application for financing. That is, you’re actively seeking a financing agreement that could factor into your credit and debt balance. Your score takes a temporary hit because if someone were applying for a lot of new debts or lines of credit, that could be a sign that they’re more risky to work with. The dip should only be about 5-10 points, and it should re-stabilize in a few months, so one or two hard inquiries shouldn’t be a problem for your overall score.

What Is Not Included in a Credit Report?

Credit reports collect a lot of important information about your financial health, but they don’t cover everything. Your credit report won’t tell you (or others checking the report) about the following:

  • Your income: High income and high credit score don’t always go together. Good credit is about what you do with your money, not how much you have.
  • Savings: Saving an emergency fund is an excellent financial move, but not one that will affect your credit score.
  • Rent or utilities: Timely payments on your water or heating bills don’t count as credit payments. If your child moves into a first apartment, paying rent when it’s due won’t show up on a credit report, either. Rent or utilities payments that default to collections will negatively impact credit, though, so that’s an important reason to stay on time (besides the obvious benefit of securing services you need in your home!).

What does ‘Not Reported’ mean on a credit report?

Credit reports can be confusing if you’re not used to the abbreviations, symbols, and codes credit bureaus use. On a credit report, “Not Reported” means the creditor didn’t provide information for the time period in question. It’s a gap in the record of information the credit bureau has on file. A “Not Reported” entry won’t negatively impact your credit. It’s a neutral code indicating that the credit bureau didn’t receive information to include.

Why are some debts not on my credit file?

Some debts (or agreements that share some similarities to debt) won’t show up on your credit report. Homeowners who enter a home equity sharing contract with Noah, for example, won’t see that contract on a credit report. Noah’s approach to home financing is not considered a loan, so it isn’t subject to the same set of regulations and isn’t reported to credit bureaus.

In other cases, an actual loan might not appear on a credit report if the lender didn’t submit the information to the credit bureau. Generally, lenders and creditors report debts to the credit bureaus. They aren’t required to do this, though, so it’s possible for a debt not to show up.

Just because you don’t see the debt on a credit report doesn’t mean you don’t owe it, of course! Your debt obligations are between you and the lender, regardless of what your credit report says. Even a debt old enough to “age off” of a credit report after 7 years may still be active if it’s within your state’s statute of limitations. A lender can also report debts to the credit bureaus at any time, even if they haven’t done so before for whatever reason.

Like other lenders, mortgage companies are also not required to report to credit agencies (although normally, they do). Before you apply for a loan, it’s worth checking your credit report to make sure it accurately reflects your current debt, including your mortgage. A mortgage is a major debt. Lenders are likely to find it even if it doesn’t appear on the credit report for some reason, and it will look strange if you haven’t disclosed such a significant part of your financial profile.

Your credit score tells lenders whether you’re a reliable borrower to work with. You can play an active role by checking your credit report to make sure information is accurate and complete, and of course by practicing healthy credit habits to keep your score high.