Understanding Your Credit Report
Your credit report is an essential financial tool. Learn how to use it to your advantage.
A credit report is what it sounds like a report that contains facts about your debt repayment history, and many lenders use this information to determine if you qualify for credit.
To obtain a copy of your credit report you can contact the top three credit bureaus or go to Annual Credit Report.com to request your free credit report. By the way, you are eligible to receive one free credit report each year, by law, and you should take advantage of that perk to properly monitor your credit history. If you want to call for a free report Equifax, Experian and TransUnion share this number 1-877-322-8228. Just call and request one from each.
What is on a credit report?
When reading your report look for these elements:
- Personal information: Your name, current and previous addresses, spouse’s name, date of birth, Social Security Number, telephone number, place of employment, etc.
- Credit history: Name, identification number, date account was opened, credit limits, current balance, monthly payment amounts, credit and debt repayment history, and payment frequency among other things.
- Credit inquiries: When you run a credit report, inquiries appear on your report. Bankruptcies, judgments and lawsuits also appear on it. This reveals credit activity to your creditors. This also lists everyone who has asked to see your report in the past two years.
- Public records: Includes things like bankruptcy filings, tax debt issues with the IRS or your state, and third-party collections accounts.
- Consumer statements: These are statements of 100 words or less written by you explaining any circumstance that has impacted your credit history.
Once you apply for your first loan or credit card, your credit report is created. Banks, credit card issuers, landlords, even potential employers can legally review your credit report. Once you receive the report become better acquainted with the language they use.
Understanding the terms used on a report
In order to make sure you are reading your report correctly it’s important to understand the terms used by the credit bureaus. They include:
Current: this means you are making or have made timely payments. Even if you don’t have a balance or the account is closed it may still appear as current.
Paid: it means a specific account is “closed.” Even if you have paid off an account it’s not considered paid unless it’s closed to new changes.
Late payments: this refers to a payment that was late or delinquent and will stay on your report for seven years even if you pay your bill in full at a later date. Credit reports include columns listing the number of times consumers have been 30, 60 and 90+ days late. It’s best if those columns are filled with zeroes.
Once you get a better understanding of the terms and layout of the report, carefully check for errors.
How to check for errors
A Federal Trade Commission report found that one in five consumers could have a meaningful error in their credit reports that would negatively impact that consumer’s credit score. Check for these top three errors that could signal trouble.
- Inaccurate information such as late payments when you know you paid on time.
- Variations in your name or strange addresses this could mean your information is being confused with someone else’s.
- Debts you didn’t charge or inquiries for loans you never applied for this could indicate someone is trying to steal your identity or use your credit for their purposes.
If you don’t understand something on your report or suspect identity theft, call the toll free number and ask for help. The credit bureaus can put a fraud alert on your file.
Preventing errors on your credit report
- Use your same name on all credit card and loan applications. For example, Richard A. Consumer should not use his middle initial on some accounts and not on others, or use Rick when applying for accounts.
- Always provide a Social Security number when applying for credit. This helps prevent creditors from mixing up your information with someone with the same or similar name.
- List your current and previous addresses for the past five years on credit applications. This helps credit bureaus link together your credit history.
Not happy with your credit report?
If you’re struggling with debt, there’s a good chance the difficulty is starting to be reflected on your credit report in the form of late payments and new collections accounts. We can help you eliminate your debt so you can regain control and rebuild your credit. Call Consolidated Credit today at 1-800-320-9929to speak with a certified credit counselor. You can also take the first step online with a free Debt & Budget Analysis.