HOW TO READ YOUR CREDIT REPORT

There are many reasons to look at your credit report, the most important being to make sure there is no misinformation in it. But once you receive it, you may be confused by all the abbreviations, terms and numbers. Understanding what a credit report includes, and what to look out for is the first step to a clean credit life.

DECIDING WHICH CREDIT REPORT TO PURCHASE

There are three major Credit Reporting Agencies, Experian, Transunion, and Equifax. With different reporting techniques, and different creditors reporting to each, it is important to see all three at the same. Credit report companies such as TrueCredit.com offer a complete, consumer-friendly 3-in-1 report and these reports shouldn't cost you more than $35.

Getting a report from a friend in the mortgage business doesn't do you much good since these reports are formatted for their usage and not for yours, the consumer's.

Getting a 'free' credit report usually entails that you sign up for a costly service, or give personal information for future marketing.

SECTIONS OF A CREDIT REPORT

A credit report is basically divided into four sections: identifying information, credit history, public records, and inquiries. Each report varies slightly in the amount of information they provide, but with a little knowledge, everything can be understood.

I.D. Section

Your identifying information is just that, identifies who you are, and can include:

  • name
  • current address
  • social security number
  • date of birth
  • spouse's name (if applicable)

    It is important that this information is correct. A false address can mean someone is stealing your personal information, having info sent somewhere else.

    Overview

    Some reports, such as the TrueCredit.com 3-in-1 contain an overview section that simply states the summaries of all your accounts.

    Credit History Section

    Here're where the important stuff lies. It consists of a list of your open and paid credit accounts and indicates any late payments reported by your creditors. It's essential that you read through this section very thoroughly.

    This section should contain most of the following items:

  • Company Name - identifies the company that is reporting the information.

  • Account Number - lists your account number with the company.

  • Whose Account - Indicates who is responsible for the account and the type of participation you have with the account. Abbreviations may vary depending on the reporting agency but here are some of the most common:
    • I - Individual

    • U - Undesignated

    • J - Joint

    • A - Authorized User

    • M - Maker

    • T - Terminated

    • C - Co-maker/Co-signer

    • S - Shared
  • Date Opened - This is the month and year you opened the account with the credit grantor.

  • Months Reviewed - Lists the number of months the account history has been reported.

  • Last Activity - Indicates the date of the last activity on the account. This may be the date of your last payment or last charge.

  • High Credit - Represents the highest amount charged or the credit limit. If the account is an installment loan, the original loan amount will be listed.

  • Terms - For installment loans, the number of installments may be listed or the amount of the monthly payments. For revolving accounts, this column is often left blank.

  • Balance - Indicates the amount owed on the account at the time it was reported.

  • Past Due - This column lists any amount past due at the time the information was reported.

  • Status - A combination of letters and numbers are used to indicate the type of account of the timeliness of payment.

  • Abbreviations for the type of account are as follows:
    • O - Open

    • R - Revolving

    • I - Installment
  • Abbreviations for Timeliness of Payment varies among agencies. Numbers are used to represent how current you are in your payments. Current or paid as agreed is usually represented by 0 or 1. Larger numbers (up to 9) indicate that an account is past due.

  • Date Reported - Indicates the last time information on this account was updated by your creditor.

    On this example report from TrueCredit.com late payments are marked in easy-to-read colors and can range from red to black.

    Collection Accounts Section

    If you've had any accounts referred to collection agencies in the last seven years, this is where they will be reported. The name of the collection agency will be listed along with the amount you owe and, in some cases, their contact information. If a collection is listed on your report that doesn't look familiar to you, contact the credit bureau and submit a dispute letter.

    For your own piece of mind, you may also want to contact the collection agency to determine the nature of the account. Here's why.

  • You may find out that the collection account is NOT yours. Perhaps it belongs to someone whose name or social security number is very similar to yours. If this is the case, ask the collection agency to acknowledge this fact in writing. They should send a copy of the letter to you AND the credit reporting agency so that the mistaken information can be cleared from your report.

  • You may find out that the collection account IS yours. If so, it is in your best interest to determine the accuracy of the amount of the collection account and make arrangements to satisfy your obligation as quickly as possible. Once the collection account has been paid, you should request a letter from the collection agency to this effect. Again, make sure the credit reporting agency gets a copy of the letter so that they can list the account as paid.

    Courthouse Records Section

    This section may also be referred to as Public Records. Here you'll find a listing of public record items (obtained from local, state and federal courts) that reflect your history of meeting financial obligations. These include:

  • Bankruptcy records
  • Tax liens
  • Judgments
  • Collection accounts
  • Overdue child support (in some states)

    It doesn't list arrests and criminal activities; just financial-related data, such as bankruptcies, judgments and tax liens. Those are the monsters that will trash your credit faster than anything else.

    Additional Information

    This section consists primarily of former addresses and past employers as reported by your creditors.

    Inquiry Section


    Contains a list of the businesses that have received your credit report in the last 24 months. If you find the names of businesses that sound unfamiliar, you should find out who they are and why they're looking at your credit! The credit-reporting agency may be able to help you with contact information.

    Time information is retained

    The length of time that information remains in your file varies.

  • Credit and collection accounts will be reported for 7 years from the date of the last activity with the original creditor. If you've filed a Chapter 7 or Chapter 11 bankruptcy, this information will be reported for 10 years from the date filed.
  • All other courthouse records will be reported for 7 years from date filed.

    Creditors information

    On some reports, there can also be a list of all your creditors and contact information.


    Not all reports give the same information, nor are they formatted the same as the examples from TrueCredit.com. But when you know what you are looking for, it's easy to find the information that could save your credit score.

    Solving Your Credit Problems

    Your credit report influences your purchasing power, as well as your chances to get a job, rent or buy an apartment or a house, buy insurance or even rent a car. Accurate negative information can stay on your report for seven years. A bankruptcy can stay on your report for 10 years!

    It is possible, and legal, to clean up your credit report. Join over 80,000 people who have used Lexington Law firm to improve their credit score and get back on track to better credit. To learn more about our services, please visit http://www.lexingtonlaw.com.




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