How to read your credit report?

scrabble letters credit report

Your credit score is determined by the information contained in the credit report. It is therefore important to be able to read the report and understand what comprises it. When you can read and understand the credit report, you’ll be better equipped to monitor and handle your overall finances more efficiently.

Where to get the credit report?

By law, you are entitled to get a free report every 12 months from the 3 credit reporting bureaus, Equifax, Experian, and TransUnion.

You can get a free report once each year or purchase the report if you want to check it more often.

The report can be accessed from AnnualCreditReport.com, which is a central online resource where people can place requests for their credit reports.

There is a downloadable request form which you’ll then mail to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281 to have your report mailed to your address.

Alternatively, you can request a credit report by calling 877-322-8228.

Keep in mind that although AnnualCreditReport.com is integrated with the three credit reporting bureaus, you’ll need to request one report at a time from each credit bureau.

Key sections of the credit report

Each of the three major credit bureaus, Equifax, Experian, and TransUnion, use information collected from public records and businesses you deal with to create the report. Basically, the report has 4 sections namely your personal information, credit history, public records, credit inquiries. Let’s look at each of the sections individually;

Personal Information

This section contains your personal details including your first and last name, current address, date of birth, and Social Security number. It will also include your type of residence, current employer, and your telephone number. Check for discrepancies or errors in spellings and numbers or missing details to confirm that it’s your report.

Credit History

This section outlines all your open and closed credit accounts. It also contains information about your repayment track record. Note that in some cases individual credit accounts are referred to as trade lines.

Each trade line will include the creditor’s name and account number, which is normally scrambled for security reasons. It is possible to have multiple accounts from the same creditor. Most creditors provide different types of accounts or in case you have relocated to another residence, the creditor will transfer the account to the new residence and give it a new number. Your credit history entry will include the following:

  • Type of credit, for example, mortgage or car loan installments, or revolving credit such as credit card expenses from a department store.
  • If the account is in your name or together with another person
  • Amount of loan, credit limit, or the highest card balance
  • The amount you still owe
  • Minimum monthly payment or fixed monthly amount you are required to pay
  • The status of your account – whether it is open, closed, inactive, or paid.
  • How timely or efficiently you’ve been the account.

Public Records

This is basically a list of all public records associated with your finances. It includes, for example, property liens or bankruptcies. It is simply a record of your finances but does not include other aspects such as speeding tickets.

Credit Inquiries

This section is also known as a record of requests. It shows you everyone who has requested and seen you’re your credit history in the last 2 years. It also shows the inquiries you’ve shared with others. Most commonly you’ll find requests from your previous landlords, employers, and other lenders such as credit card companies. Inquiries given to others, known as hard inquiries, and those that you’ve authorized potential creditors to make can affect your FICO score for a year and remain on your report for 2 years.

Account in Good Standing Section

The section titled “Accounts in Good Standing” is also known as “Open and Closed Accounts” or Satisfactory Accounts. It shows all your present accounts that have not been defaulted on or gone to collections. It is advised to always have good standing accounts.

This is an important part of the credit report as it shows the current status of each account you have. It tells you whether an account is closed or still open and if it has been transferred. Late payments are also indicated in this section. Take time to go through this section and ensure the information provided is accurate as it can adversely affect your credit score.

Negative items to watch out for

The credit report also includes all the negative aspects of your finances such as negative accounts, negative public account data, and collections.

Remember, each negative information remains on the credit report for 7 years.

However, Chapter 7 bankruptcies remain on the report for 10 years.

A negative account is one that has wasn’t paid as per the agreement.

Collections are accounts that have been sold to collection agencies due to the lender’s inability to collect from you.

Public records are bankruptcies, judgments, and judgments reported by the county, state, and federal courts. The section, however, does not include arrests and other non-financial information. It is important to check properly and ensure that the negative information in your report is real and accurate.

Inaccuracies in the credit report

fix my credit yellow card on a board

You’ll have to dispute any error or inaccurate information in the credit report. Once you find a mistake in the report, find all the supportive documents to back your claim and file a dispute with the credit bureau. If the dispute is not resolved within 30 days, make a follow-up and keep on monitoring.

Make sure to request a credit report each year to ensure the information it contains is accurate at all times. Inaccurate information can potentially lower the credit score and prevent you from getting credit or even renting an apartment when you want to. Dispute any mistake you find in your report immediately so you can have a good standing credit report.