For some, credit can be an intimidating topic. Others monitor their reports regularly, and do everything they can to gain just one more point on their credit score. Understanding exactly what your credit report says and will mean to you in the future is a pivotal piece of your overall financial well-being.

What is actually on a credit report? Usually, all of your current and previous credit lines will be included on your report. Credit cards with or without balances, your car loan or lease, student loans, mortgage history. The account type, credit limit, outstanding balance, and date opened will all be included as well. Different inquiries, both hard and soft, will show on your report, but may not have affected your score.

There are three main credit bureaus to know about:Credit Reporting

These are the big three, but there are other smaller bureaus. All of these bureaus have different ways of formulating your credit score, and different lenders will utilize one of the three to check your approval for credit. There are a few things that attribute to your overall credit score, and all of these are weighted differently with each of the bureaus. Payment history, amount owed, new credit, the different mix of accounts on your report, and length of credit are all factors that define how high your score is.

Missed or late payments, hard inquiries, or other red flags seem to hang around on your credit forever. While it seems like a long time before those things fall off, it’s actually usually a maximum of seven years and then those negative marks disappear. On the plus side, positive things like large credit limits and accounts with no balances tend to last forever, with the exception of aged out accounts that simply fall off. Something that doesn’t follow the 7-year rule however, is bankruptcy. Declaring bankruptcy can last on your credit report for up to 10 years.

When trying to decide if it’s worth it to check your credit, you should do your best to understand the difference between a soft and hard credit inquiry. Typically, when you check your credit yourself, that is what’s known as a soft inquiry. Whether you have an app that helps you keep everything in check, or you regularly request a report from one of the credit bureaus, this will show on your report without affecting your credit. This also works when a lender runs your credit to get you a pre-approval. However, when you are making a serious inquiry into attaining credit such as a loan or opening a new credit card, that will affect your balance. Regularly checking your credit is also an excellent way to avoid long-term identity theft, and maintain your good credit standing. Check out all of HomeTown Bank’s resources related to identity theft here.

While checking your credit can be an intimidating activity, it is an important part of your financial health. Knowing what makes up your report, the different bureaus involved, and implications of different credit will set you up for success.