How to Read Your Credit Report

You can think of your credit report as a snapshot of your overall finances. Everyone can review it, from lenders to potential employers, and the details it contains are the factors that determine your credit score. By learning how to read your credit report, you can be in better control of your finances.                            

Your Credit Report Shows Your Missed Payments

TransUnion, Experian, and Equifax, the three major credit bureaus, gather information from the public records and all companies that you do business with then use the information to come up with your credit report.  There are four sections in the report, including the following:

• Personal information – It includes your  name, your past and current addresses, birth date, and Social Security Number
• Credit history – It includes all of your closed and open credit accounts together with your track record for paying them back.
• Public records – These include public records that are related to your finances like bankruptcies or property liens. These won’t include your nonfinancial public records such as speeding tickets.
• Credit inquiries – The section contains everyone who viewed your credit for the past two years including lenders, employers, landlords, and others.

It’s Different from Credit Score

Don’t forget that your credit report is basically a history of all payments and accounts you have. Your credit score is related but is separate. This is the number generated from your credit report results. Lenders use this to decide if they will be lending to you and the terms they come with.

Credit scores could range from 250 up to 900 although there are several credit score providers that might stick to a narrower range. For instance, 300 to 850 is the most common range for FICO credit score. Your credit is better if the number is higher.

Your credit score is not really included in your credit report but it informs you of it. You can request your credit score free of charge from your credit card issuer or financial institution or you might also need to pay for you to get it.

There Might be Mistakes in Your Credit Report

Check your credit history, specifically the subsection labeled adverse accounts. This can potentially show some negative items like a debt sent to collections or a credit account that is past its due, both of which could hurt your credit.

There might be mistakes in this section that you might need to correct.  It is always a wise idea to contact the creditor and the credit agencies themselves. In case they don’t respond, make sure you report the issue to the CFPB or Consumer Financial Protection Bureau.

For instance, if you find an error that looks fraudulent, like a mortgage for a house that you don’t even own, make sure you act right away. Call the credit bureaus to request them to have a fraud alert placed on your account. It is also important to file a report with the Federal Trade Commission or the police.

Now that you got some idea of how to read your credit report, you will be better equipped in managing your credit.