Answering Reader Questions on Credit Reports

Wallet readers recently wrote in wanting to know more about all things credit-related. They asked savvy questions about what information is put on a credit report–and for how long–and what factors can hurt or help your credit score. We did a little digging on your behalf. Here is what we learned:

One reader wanted to know how long one’s employment history stays on a credit report. The short answer: Don’t worry about it. Employment history, which is sometimes included in the identification section of a credit report, “doesn’t count in your credit score and doesn’t have a negative effect on your credit at all,” says John Ulzheimer, president of consumer education at Credit.com.

In fact, most consumers have outdated employment information on their credit reports, says Norm Magnuson of the Consumer Data Industry Association, a trade group for the credit-reporting industry. If having the information on there is bugging you, you should contact each of the three national credit reporting agencies (TransUnion, Equifax and Experian) to have employment information removed, says Ulzheimer.

Readers also wanted to know how long it takes for your credit report to reflect recently paid-off credit-card balances. Any payments made to your credit card should show up on your credit report within 30 days. Credit-card issuers send updates to the credit bureaus once a month, so depending on when you made the payment, it could take a few days or a full month before the lower balance shows up on your credit report.

Another reader asked how going over your credit-card limit affects your credit score. Credit bureaus look at how much of your available credit is being used up when they calculate your credit score–and going over the limit on a credit card will give you a high debt-to-credit ratio, which can ding your score. “And that can lead your other lenders to take actions like lowering limits, increasing your interest rate, increasing your minimum payment requirement or closing the account down completely,” says Ulzheimer.

The experts advise avoiding this situation by being conservative with credit-card use and making timely payments. If you happen to go over the limit accidentally, you might be able to minimize the damage if you immediately pay down the balance before the credit-card issuer sends an update to the credit reporting agency. But this is a risky gambit that you’re likely to lose.

Remember, you’re entitled to see your credit report–the blueprint for your credit score–once a year at no cost from each of the credit-reporting agencies. You can order a free credit report at AnnualCreditReport.com.

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