Credit Basics
How to read your credit report
Bankrate.com
July 8, 2004
Better off blank
The next section is the part you want to be absolutely blank. The public records section "is never a good story," Sweet says. "If you have a public record
on there, you've had a problem."
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.
The final section is the inquiries. That's a list of everyone who asked to see your
credit report.
"Any time anyone gets into the report, it'll post an inquiry," Ulzheimer says. "If
you call the credit bureau and ask for a copy, it will be on there. It's a very
detailed entry record. It's great for the consumer."
Inquiries are divided into two sections. "Hard" inquiries are ones you initiate
by filling out a credit application or taking your child to the orthodontist. "Soft"
inquiries are from companies that want to send out promotional information to a
pre-qualified group or current creditors who are monitoring your account.
You may have heard that a large number of inquiries can have a negative impact on
your credit score,
but you're probably OK.
"The vast majority of inquiries are ignored by the FICO scoring models," Ulzheimer
says. "They're not the steak in the steak dinner."
For instance, the model has a buffer period that ignores inquiries within 30 days
of getting a mortgage or a car loan. It
also counts two or more "hard" inquiries
in the same 14-day period as just one inquiry.
"You could have 30 in two weeks and it only counts as one," Ulzheimer says.
If you find a mistake on your credit report -- an account that isn't yours or a
disputed amount -- you'll need to fill out the form that comes with the report,
or follow the instructions on the explanatory sheet.
The process takes time because the creditors have 30 days to respond to a charge
of a discrepancy. As long as a charge is in dispute, that dispute will show up on
your report. Long-time lenders say it's common for reports to have errors. Some
estimate that as many as 80 percent of all credit reports have some kind of misinformation.
