There are no documents that can paint you a more accurate and comprehensive analysis of your credit health than your credit report. Your report details your various accounts, public records information and any missteps that may be impacting your score. Given the importance of your credit report, it’s important that you check it at least once a year to both gauge your credit health and detect any misinformation that may be holding you back.
However, many people who review their file may not know what they’re looking for, which can hold them back from truly understanding where they stand and the actions they need to take to make improvements. When you’re examining your file, there are three main areas you should focus on to get an accurate reading of your credit health.
1. Erroneous information
The first action you should take is going through each and every account listed to seek out potential errors or mistakes. This may include an incorrect balance, late payments that were not really late and even missing accounts. These mistakes can negatively impact your score, so disputing false listings is crucial. It’s also important to contact bureaus if any public records information that should have expired is still being listed on your account. This can include a liens, judgments or bankruptcies that have passed the statute of limitations. In addition to actual account information, double check to make sure your personal details are correct, including social security number, address, date of birth and employment history.
2. Account details
Many people who pay the minimum balance on credit cards each month may have shaky credit scores and fail to understand the reason behind it. The answer may be in their account details. High balances can quickly cause a credit score to decline, even if minimum payments are being made. Looking at your account details may alert you to spending patterns that are not only resulting in more debt, but also driving up your utilization ratio and driving down your score. You may also find that a late payment, account in collection or lien placed on your property caused your rating to fall.
3. Suspicious information
If you find an account you never opened, a lawsuit you were not involved in and accounts in collections that are unfamiliar, you may be a victim of identity theft. It’s important to contact the credit bureau, lender and law enforcement immediately to get to the root of the false listings and have them removed from your file.