How to Read Your Credit Report

Understanding how to read your credit report is necessary to insure there are no errors and to be sure that your financial history is accurate. Creditors report your payment history and inquiries to one or all of the three credit reporting bureaus: Transunion, Equifax and Experian. It is important to monitor all three bureaus since the information can be dramatically different from one to the next.

Personal Information

The first section on your credit report is identifying information. This will list your name, social security number, address and employers. If you changed your name, you need to notify all three credit bureaus so they are applying your credit history to the right report. When you pull your credit report, check over this section and make sure there are no errors. Notify the agency if they have any wrong information.

Credit History

This section will include all credit lines you have. The accounts will be listed individually with the account number, creditor name and the type of line it is, installment or revolving. Then the credit line and amount owed is listed. Every month your creditor gives this information on a certain date to the bureau. It may be at the months end, but it does not show an average daily balance, it shows the amount owed on the date the information is furnished. So you need to be careful to keep these balances low in order to keep your credit score high. It is recommended to keep balances below thirty percent of the limit. The payment history will also be listed. Each month, for as long as the credit line has been established, there will be a notation of whether the account was paid on time, thirty days late, sixty days late and so on.

Public Record

A public record is an occurrence that is often filed in a court of law. Bankruptcy or tax liens are considered public records. They are very harmful to your credit and the public records section ideally should be blank. If you did have a public record, it usually remains for seven to en years in that section of your report.

Inquiries

An inquiry is any time someone, other than yourself, pulls your credit report. There are two types of inquiries: hard inquiries and soft inquiries. A hard inquiry occurs when you apply for credit and the creditor needs to check your credit report. It could be a mortgage, credit card or department store card. Big ticket items often require shopping around for the best loan. The bureaus are aware of this and any inquiries made within thirty days of obtaining a mortgage, or fourteen days of buying a car, are not reported, This allows consumers to rate shop without being penalized. Other than those instances, it is harmful to have many hard inquiries on your report, since it seems you are always searching to obtain new credit. Soft inquiries are made by credit card companies who want to send you pre-approved offers. These are not harmful to your credit score.



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