Credit Report: How To Read Yours
An important aspect of your credit score is your credit report. A credit report is a detailed report of your credit history that will allow a lender to determine your credit worthiness, or assess your risk as a borrower.
When requesting a credit report, it’s good to check with all of the main credit bureaus. In the U.S. there are 3 credit reporting bureaus, Equifax, Experian and TransUnion. Each bureau could give slightly different information on their respective report, so it is good to get all three in order to get a complete assessment of your credit history.
Also it is best to ask the credit reporting bureaus directly for your credit report because when you do it through a bank or potential lender, the report won’t be as consumer friendly and will include information more pertinent to the lender. There are resources like Annualcreditreport.com, that will give you direct reporting from the three credit bureaus every year for free.
A credit report is broken up into 4 parts.
A credit report is divided into four distinct sections: identifying information, credit history, public records and inquiries. Each one outlines a particular aspect of your credit history to determine your eligibility for credit.
1. Identifying Information
The first section, identifying information, is actual reported information to identify you as a credit borrower. You should take the time to review this section for inaccuracies, especially in your social security number. It’s common to see multiple variations in your name, which is fine.
2. Credit History
In the credit history section of your credit report, you will notice the name of each creditor and your account number associated with that line of credit. For each account you will be presented with the following information:
- The kind of credit you have with each lender; installment which are car loans or a mortgage, or revolving like a credit card.
- If you opened the line of credit alone or with another person
- Total amount of the loan or the highest credit limit or highest balance on the card
- How much you still owe on each line of credit
- Whether you have fixed monthly payments or are making minimum monthly payments
- The current status of the account (i.e. open, inactive, closed, paid, etc.)
- How well you have paid on the account.
- Your payment history
Depending on the credit bureau, this section could also include the amount you pay per payment.
3. Public Records
This section will only include financially related information not arrests, lawsuits and other information not related to your financial repertoire.
Any comments in this section will include bankruptcies, judgments and tax liens among other information, which all have varying degrees of consequences to you credit.
4. Inquiries
The final section of your credit report will be inquiries. An inquiry is anyone who has asked to see your credit report.
Inquiries are divided into two types: hard, which are made by the consumer when they fill out a credit application and soft, which are made by companies, potential employers or current creditors who want to monitor or review your credit standing. However, soft inquiries only show on reports given to consumers.
If there is a mistake, report it right away.
If you are going through your credit report and start noticing mistakes, especially in your credit history and public records section, you want to report it right away.
Mistakes on your credit report could cost you a significant amount of money on loans and interest rates. A mistake in your credit report, means that there is an account listed that is not yours, there is an erroneous amount or there is an account that you have paid off in full that is reporting with a different status.
Disputing a credit report mistake.
You can dispute mistakes through the credit bureaus so that your credit report does get corrected and will more accurately portray you to lenders. Once a dispute has been filed, the credit bureaus will investigate the claim and give your creditors 30-45 day to respond to your dispute.
However, if you feel that your dispute is not being handled fairly, you can always file an online complaint with the Consumer Financial Protection Bureau which will help speed up the dispute process.
Seek professional help if you are experiencing unresolved credit issues.
If once you do get your credit report and feel that you need expert help to handle your credit or debt problems, you can seek out professional help. An expert will be able to handle your credit issue and guide you toward your available options.