How to Read and Understand your Credit Report

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Understand your Credit Report

Tuesday 24, 2017

Your credit report is a crucial document that can have a significant impact on both your life and your lifestyle. It is through this report that anyone will ascertain whether you have good or bad credit. This will determine whether you can receive a loan, credit card or even a mortgage.
The best way to understand what is happening on your credit report is to review it periodically. While you are doing so, you need to be able to understand exactly what is revealed within it, and where you can get certain information. Your report may be overwhelming because it holds a considerable amount of information, and then can become very challenging to navigate. Here, you will discover how you should read through and then understand you report.
You need to begin by understanding that there are three major credit reporting agencies you will find in the United States. For the most part, they all follow the same format for your credit report. These agencies are Equifax, Experian and TransUnion.

The Beginning Of The Credit Report

All credit reports start in the same way, bringing forth your personal information. This will then be followed by information of your public record, information on your creditors and inquiries on your credit. The personal information will include” –

– Your first name and surname as well as any additional aliases
– Date of birth
– Social security number
– Driving license data
– Employment data
– Current address
– Previous address
– Spouse’s name

As you are looking at this section, you may notice that there is an instance your name has been spelled in the wrong way, or that there is more than one social security number. This should not cause you any alarm. Every time someone asks for information from your report, the way that they queried it is left on the report. In this way, it becomes easier to create links with any activity from the past.

 

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Public Information

The next section of the credit report will list and explain any open legal issues that you may be facing. These legal issues will have to relate directly to your current finances. The information here is likely to include Tax Liens, Bankruptcies, Wage garnishments, and Judgements.

Ideally, in this section, you should be aiming for it to be completely blank so that there is no evidence that you have any type of public record against you, especially financially related ones. There are the main problem issues that are bound to make your credit plummet much faster than any other issues that may arise.

Creditor Information

In this third section of your report, you will find the bulk of the information that will help you ascertain your overall credit. It is here that you will see information an all your existing lines of credit. Here, you will be able to ascertain whether the accounts are current or opened, closed, or sent to collections. It will also let you know who is responsible for the account, including whether it is an individual account or joint. The balance of the account is also including as well as the date of the most recent payment. If there is any information on accounts that are past due, it will be within here. Another key piece of information that you will find in this section is your credit limit.

Trade lines is another term that is used to describe these individual accounts. When you look through a trade line, some of the information that you find will include the name of the creditor, account number, and the total number of accounts that you have under one creditor.

Credit Inquiries Removal

You may find that there are people who have looked into your credit information for various reasons, and each inquiry is recorded within this section. Inquiries can be requested from individuals as well as businesses and may be necessary when someone wants to give you a loan or other financing. Inquiries fall into two key categories. When there are hard inquiries, it means that a lender is checking out your viability once you have applied for a loan. If there are many these inquiries, then your credit score may be affected. There are also soft inquiries which occur when it is you looking to find out about your own credit report so that you can explore a line of credit. As this is unlikely to be something that you do very often, then your credit score may not be affected.

Consumer Statement

On section that you may find on your credit report is the consumer statement. This section contains all the information that has generated directly from you as the consumer. For example, when you decide to file a dispute to any of the credit bureaus, an investigation will be carried out. Should this investigation not actually resolve the issue, you can provide a statement to submit with your report which explains your view of the situation. The total number of the words allowed in this statement are 100. With this, lenders can learn more about you when they source your credit report. Ensure that the consumer statements you provide are minimalistic and necessary so that they can be taken seriously.

Calculating your Credit Score

To understand your credit report, you need to have some understanding of how your credit score is calculated. Your credit score is also known as your FICO score and there are five categories that it is based on. These are as follows: –

– Payment History – This makes up about 35% of your total report and will show how your past accounts have been paid. The better you are at making payments, the higher your credit score will be.
– Amounts Owed – This makes up the next 30% of your total report and makes it possible for lenders to know how much is owed. From this information, you will be able to tell whether you are near the credit limit for your account.
– Credit history length – This accounts for 15% of your credit history length. When it is long, then your overall score is bound to increase, and it will also go up depending on how actively you have been using the accounts.
– Types of credit – This makes up about 10% of your score and includes information on all the installment loans, mortgage loans, credit cards, finance company and retail accounts that feature in your report. Whether the accounts are open or closed, they will be revealed in this section.
– New Credit – This is the final 10% if the report and will feature information on your inquiries into new lines of credit. When you have many these inquiries, then you may find that your credit score has been lowered.

Fico Loan Table

Common Terms

There are some common terms that you will find on your credit report, and here are some of them that you need to know: –

– Open account – This could be in reference to any utilities that you have as they refer to accounts where the balance needs to be settled in full at some point every month.
– Revolving account – These accounts are revolving and will normally refer to credit cards. There is an interest fee that is charged on the amount that is revolved.
– Instalment account – This refers to an account that normally has loans, and they will have payments that are fixed which will be completed in a fixed period.

Status Codes

On your credit report, you will find that information is made available in various status codes. Here is an idea of what you will see and what these codes mean.

– CURR ACCT – This means that the account is both current and in good standing.
– CHARGEOFF – This means that there is an unpaid balance that is charged off. In other words, the credit grantor has possible handed over this balance to a collections agent for retrieval.
– PAID – This means that the account balance has been paid off making the account inactive.
– CUR WAS 30-2 – This means that the account is current but was 30 days late twice.
– COLLECT – The account is far past due and has been forwarded to collections.
– FORECLOSURE – This means that the property has been foreclosed.
– DELINQ 60 – This means that the account is 60 days past due.
– BKLIQREQ – This means that the debt has been forgiven using Chapter 7,11 or 13.

What will be missing from your credit report?

There is some information that you will not find on your credit report, even though it may have some relationship with your actual credit. However, it is worth noting that although your credit report gives insight into your history, it does not actually contain your credit score. You will need to purchase your credit score separately or go to your bank account or credit card so that you are able to view it for free.

The main reason that you are going through your credit report is to ensure that there are no errors within the report. With these tips, you should be able to understand everything that you are reading. If you do find an error, you will notice that at the end of each credit report is a form. Follow the instructions on this form and use it to alert the relevant credit bureau that you have noticed an issue with your report. Once you have submitted this, that bureau will have a total of 30 days to respond and make a correction where there is any discrepancy.