How to read credit report?

A credit report, like the word explains, is a report comprising of your credit history. It is basically a benefit for potential lenders, where they can check your credit history and analyze your risk (your likeliness to pay your payments on your loan or credit accounts within the time-frame). The credit report will provide the lenders, the following details:

  • The date when you took any loans or opened your credit account
  • The present balance in your account
  • The history of your payments
  • The total amount of loans you’ve taken out and your credit limits
  • Tax liens or bankruptcies (if there are any)
  • Information to identify you (address, name, social security number)

Credit reporting companies, also known as a credit bureau, are required to provide information to any company looking to give you a credit account or a loan. Such companies include: Experian, Equifax or TransUnion. The information collected from all these bureaus will vary, as they are independent companies and it totally depends upon which credit reporting company was used by them.

Getting a Credit Report: What to do?

Every year, you’re given the permission to get a free copy of your report from the above mentioned reporting companies. However, the process is not automatic and in order to get the copy, you need to ask them for it. Also, due to the slight difference in the information provided by every company, it is better if you ask all three of them.

If you plan on order a free credit report, you can call on 877.322.8228 or check the website annualcreditreport.com.

Now that you’re aware of the process to get the credit report, let’s discuss the four risky areas you need to look out for. These areas would assist you in identifying situations of potential identity theft.

Personal Information

The personal information to identifying purposes include:

  • Your Social Security Number
  • Name
  • Birth Date
  • Phone Number
  • Address

There may be different spellings of your name, so don’t be surprised. Some variations such as : your name without or with your middle name, a different spelling, maiden or married name and more, are going to be there.

These variations, are left on purpose by the credit reporting companies in order to maintain a connection between your credit information and identity. As long as the information belongs to you, variations in your personal information will not cause any harm to your credit score. You need to check this section on order to ensure that the information used, only belongs to you and not anyone else.

In case the information provided on your credit report is incorrect, or does not belong to you , you are required to immediately inform the credit reporting company and file a dispute. You should be also informing the creditor about this and ask them to update the credit reporting company about this matter.

Consumer Statements

This section comprises of the brief statements submitted by you to the credit bureau. For instance, if you’ve filed a dispute which has not yet been resolved, you statement is actually a proof about your disagreement with the mentioned information in the report.

Your Account History

This section comprises of the most information. It basically consists of every single detail of your credit accounts and how you’ve made payments.

It is a fact that this section is the most detailed one, however, you are required to read each and everything in this section in order to make sure that the report contains the correct information.

Every account will include the following information:

  • Name of the Creditor of the company reporting the data
  • Account Number it may be hidden or shortened due to privacy reasons
  • Type of account i.e. education loan, revolving account, auto loan.
  • Responsibility, includes whether you have joint, authorized or individual user with the responsibility for the account.
  • Monthly Payment: The minimum amount charged monthly.
  • Date Opened: Year and month of the establishment of the account
  • Date Reported: The date when the creditor last updates his information with the credit reporting company.
  • Balance: The owed amount on the account when data was reported.
  • Loan amount or Credit limit
  • High Credit or High Balance: the highest amount of money charged on the card. In case of installment loans, High credit is the original amount of loan.
  • Past due: Payment past due at the time of data reporting.
  • Remarks: Comments and feedback left by the creditor regarding your account.
  • Status of payment: Shows the account status, i.e. past-due, current, charge-off. Data regarding past delinquencies can also be present in a current account.
  • Payment History: Shows the status of your payments on a monthly basis, since the establishment of the account.

Collection accounts are also a part of the account history section, otherwise, they might be present in a separate section. It depends upon the company that is responsible for the credit report.

Public Records

Public records are usually those that consist of information regarding tax liens, judgments, bankruptcies, country courts and state records, and also overdue child support, in some states. It depends of the account type, but a public record can be there for 7-10 years on the credit report.

This section does not include convictions of criminal arrest details, it only consist of severe financial blunders. However, public records can harm your credit severely, therefore, it is better to keep this section clear.

Inquiries on Your Credit

This section basically lists and reports the activity on your account, for example: the time when someone checked your credit. Inquiries like utility application and housing applications as well as the times when you applied for limit increases or for a new card will be mentioned in this section.

Entries are usually divided as per their types. Hard inquiries are the ones that may result in temporary and small dip in the credit scores. They basically happen when a potential creditor gets authorized by you to check your file as a step in the application.

Whereas, soft inquiries usually have no effect on the credit scores. They happen when a potential credit (in order to send a promotional offer) sees it or if you yourself check your credit.

Note that both types would consist the organization’s address, name and the date. You need to ensure and keep a check that the hard inquiries listed, were all authorized by you and also that after two years, they are removed from your report.

Conclusion

You can improve your credit by knowing and learning the right way to read your credit report. Regularly monitoring your credit report is a significant task in order to be aware of any possible identity fraud or theft.