To Read & Understand Your Credit Report
First off, there are three major credit reporting agencies in the United
States: Experian, TransUnion and Equifax. Reviewing your credit report
from just one of these agencies is a useless endeavor. You need to look
at all three. People tend to pull one and think everything is the same
on all of them. That's not normally the case. The reports will have different
information because it's a voluntary system, and creditors subscribe to
whichever agency they want -- if any at all.
It's recommended that you order the report directly from the credit bureau
instead of asking a buddy who works at a bank to pull one for you. Those
credit reports are written for people who work in the credit industry.
The one you get from the credit bureau is designed for consumers. The information
is the same, but it's much more consumer friendly.
A credit report is basically divided into four sections: identifying information,
credit history, public records, and inquiries. Identifying information
is just that -- information to identify you. Look at it closely to make
sure it's accurate. It's not unusual for there to be two or three spellings
of your name usually because someone reported the information that way.
Other information might include your current and previous addresses, your
date of birth, telephone numbers, driver's license numbers, your employer,
and your spouse's name.
The next section is your credit history. Sometimes the individual accounts
are called trade lines. Each account will include the name of the creditor
and the account number, which may be scrambled for security purposes. You
may have more than one account from a creditor. Many creditors have more
than one kind of account, or if you move, they transfer your account to
a new location and assign a new number. The entry will also include:
• When you opened the account
• The kind of credit (installment, i.e. car loan, or revolving, i.e. credit
• Whether the account is in your name alone or with another person
• Total amount of the loan, high credit limit, or highest balance on the
• How much you still owe
• Fixed monthly payments or minimum monthly amount
• Status of the account (open, inactive, closed, paid, etc.)
• How well you've paid the account
The next section is the part you want to be absolutely blank. The public
records section is never a good story. If you have a public record on there,
you've had a problem. It doesn't list arrests and criminal activities but
does include financial related data, such as bankruptcies, judgments, and
tax liens. Those are the monsters that will trash your credit faster than
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,
post an inquiry. If you call the credit bureau and ask for a copy, it will
be on there. 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. For instance,
the FICO scores have at least a 30 day buffer period where auto and mortgage
inquiries are initially bypassed and not counted. 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.
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.