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Discover the Parts of a Credit Report and What They Mean |
| By: Cathy Taylor |
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So you ordered a copy of your credit report to check for inaccuracies and
get the most from your credit score. Now how do you read it? Your credit
report is read and used by any number of people you deal with on a daily
basis, from your landlord to your employer to a potential lender. Fortunately,
it has gotten easier to order a copy of your report, but it's not so easy to
understand what all those abbreviations and numbers mean once you've got
it.
If you haven't ordered your credit report yet, you will soon be entitled to a
free copy from each of the three major credit bureaus, Equifax, Experian,
and TransUnion. Some states can already take advantage of this new policy,
but people living in eastern states will have to wait until September of 2005.
Order your free yearly copies from all three agencies and check for the
availability of the annual reporting program in your area at the same website:
www.annualcreditreport.com . Each
report will contain different information because retailers and creditors only
report to the agency in their area or with whom they have an agreement.
Once you have your credit report in your hands, you will see that it is divided
into four main sections:
? Consumer information
? Account histories
? Public records
? Inquiries
Double check the accuracy of your identifying information. This will include
your name, address, phone number, previous addresses, date of birth, and
Social Security number (SSN).
Next, for each account history, or trade line, you will see the following
information:
? Date you opened the account
? Type of credit account (either installment, such as a car loan or
mortgage, or revolving, such as a credit card)
? Name(s) on the account
? Total loan amount, credit limit, or highest card balance
? Amount you currently owe
? Amount of your monthly payment
? Account status (either open, closed, inactive, paid, or other)
? How promptly you have paid on the account
Credit agencies vary as to how they word various sections of the report and
should provide you with a guide to reading their versions. One agency might
report in the last column of an account history that you paid ¡°on time¡± or
¡°30 days late.¡± Another agency might use a numeric code to rate how well
you paid off a debt. R1 is the code used for an excellent repayment history
on a revolving charge account. I1 is the code used for an excellent
repayment history on an installment account. Obviously, the higher the
number next to either the R or I, the lower your repayment history is rated.
So an R4 would indicate a history of late payments.
The public records section will include any tax liens, bankruptcies, judgments,
or other financial-related legal matters. Depending on the type of action
taken, these damaging records may stay on your credit report for up to 7 to
10 years.
The last section lists the inquiries made on your credit. Hard inquiries are
those requests to pull your credit when you apply for such things as loans or
lines of credit for services. Soft inquiries result when companies sending out
promotional items to pre-qualified individuals check your history or when your
current creditors check your payment status. The soft inquiries only show up
on the report that you order, not on reports pulled by lenders.
While too many inquiries in a short period of time can signal a red flag to a
lender, most credit scoring models are least affected by this portion of your
report.
Check your report for any errors and report them immediately in writing. If
you need more information about how to reach the three main credit
bureaus, please go to www.apscreen.com.
Don't forget that the credit agency providing your report is also a great
source of information on not only reading your credit report, but raising your
credit score.
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Cathy Taylor is a marketing consultant with over 25 years experience.
She specializes in internet marketing, strategy and plan development,
as well as management of communications and public relations programs
for small business sectors. She can be reached at Creative Communications:
creative-com@cox.net or by visiting www.apscreen.com |
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