How To Read, Review, and Understand Your Credit Report

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The easy part is obtaining your credit report for free from the three credit reporting bureaus (or from a service like Credit Karma or Discover It). Comprehending this information that they report can be challenging. There are several key sections on your credit reports.

We will look at each of them next along with terms they use that may not always be self explanatory. Remember that the credit reporting bureaus arrange their reports somewhat differently, meaning that the sections can be ordered differently with each report.

Personal Information

Included in your personal information section are your name(s), previous and current phone numbers and addresses, your birth date, Social Security number, and some previous (and possibly current) employers. Your name could be spelled differently in places thanks to any variations that you utilized on credit applications (married versus maiden names and with or without middle initials).

Do not be concerned about a telephone number or employer that may be missing. What you should watch for here in reviewing your credit report are any addresses that are not yours. This is especially troubling if you see accounts that are not yours alongside them. It could mean that someone has utilized your personal information to create false accounts for themselves in your name. The bills would be diverted to the false addresses so that you are not informed of the deception.

Accounts

In this crucial section are all of your accounts that are current (not defaulted on or sent out to collections). This remains the heart of your credit report. Every account will provide a critical summary underneath it in the beginning. This will include the following:

Creditor’s name and address, date opened, and account number
Account Status – if the account is opened, closed, or transferred, and most importantly if you are current with your payments
Account type – credit card, auto loan, student loan, etc.
Your status – details whether you are a joint owner, an individual owner, or merely an authorized user on the particular account
Total credit line or instalment loan original dollar amount – this includes all payment and balance information, such as the last date the creditor dispatched your account information update to the reporting bureaus. This will not reflect today’s balance on your account. Even if you pay off your credit card full balance each month, the report could depict a balance if this activity was reported in the middle of your billing cycle

It is critical that you check carefully the payment history for any mistakes (like late payment notifications if you have always paid on time).

You need to be certain that all of your account limits are listed correctly, since this does impact your critical credit utilization ratio (which counts for 30 percent of your score).

Also if one of your accounts was closed, you should observe who closed the account and on what date for accuracy. Good standing closed accounts might remain indefinitely on your credit reports. If the creditor closed them because you did not meet your account terms as agreed, then these should drop off the credit report seven years after the first delinquency of the account.

Any Negative Information

This section of negative information details any accounts that were not paid according to the terms of agreement, public records of bankruptcies, and collections accounts.

This derogatory information remains on your report for a full seven years, besides Chapter 7 bankruptcies that hang around for 10 years.

If you have accounts listed in this section, you need to be certain that the negative information is fully accurate. If you see any incorrect collection or account listing information here then you need to file disputes for removal. Similarly if an item is listed after the seven year drop off period, you need to contact the credit reporting bureau right away.

Credit Report Inquiries

In this section, the bureaus detail all instances when a third party did a hard inquiry check on your credit. Each time that you ask for a credit limit increase or apply for new credit cards, loans, or even apartment/housing or utilities this will be noted.

These different entries are often separated out. Hard inquiries will be listed together for each time you allowed a possible creditor to investigate your file in the process of an application. Too many hard inquiries will lead to a drop in your credit scores that is temporary.

Soft inquiries do not impact your credit scores. They occur if you choose to check out your own credit report or score or if a promotional offer is sent out to you by a credit card company.

Each kind of inquiry will reveal the inquiring organization’s name and address and the date of the relevant check. You should be certain that each hard inquiry was personally authorized by you so that it is not fraud. Also check to see that they have all fallen off from your report after two years have passed.

Do not be daunted by the appearance of complexity with your credit report. No one will show the care and concern to make sure entries are correct as passionately as you do. It is critical that you review your reports at the very least annually, if not multiple times a year.