Comprehending a Credit Report

Obtaining a credit report is an excellent way to begin taking control of your financial future. It's recommended that you review your credit report once a year, not only to be aware of your standing with creditors but to also keep abreast of errors and fraud. However, once your report arrives you may have trouble making sense of it. How are you to read and understand a credit report?

There are three major credit reporting agencies that issue credit bureau reports; Experian, TransUnion and Equifax. It is recommended that you obtain reports from all 3 credit report agencies as they most likely contain varying information since creditors subscribe to agencies on a purely voluntary basis. The credit reports provided by each of the different bureaus may present somewhat differently but generally speaking the information will be broken down in much the same way.

There are four main parts to the credit report: personal profile, credit history, public records and inquires. Check each section carefully for any errors. Note any errors you may discover on a separate piece of paper as you read over your report.

Personal Profile

At the top of the credit report you will find all your basic information such as your full name, current and previous addresses and employers, social security number, and date of birth. Your spouse's name may also appear if applicable. In addition, you may notice several variations of your name listed. This can occur when creditors record the information incorrectly. These discrepancies are usually left on your credit report. It is important however, to ensure that your address is correct. An incorrect address could alert you to a possible identity theft.

Credit History

The next section is your credit history. This provides you with an itemized list of your current active, past closed accounts and their balances or arrears. Listed first is the name of the creditor and your account number for each bill--sometimes the account numbers may appear partially obscured for security purposes. These debts could include real estate mortgages, credit cards, car loans, or medical bills.

There will be a column for identifying the nature of the account; Joint, Individual, Undesignated, Authorized User, Terminated, Maker, Co-signer or Shared. There will also be a notation of the date when the account was opened, number of months the account payment history has been reported and date of last activity. The report will show your high credit limit or the maximum you are allowed to borrow, if applicable. There is a column for Terms which indicates the number of instalments or monthly payments remaining on the account.

The next few columns will show the balance remaining on the account, any past due amounts and the status of the accounts. There are two types of accounts; instalment and revolving. An Instalment account means that there are fixed payments and a specific ending date, such as with a car loan. A revolving account is one with no fixed ending date as with credit card debts. Creditors like to see few revolving debts.

The credit report will indicate the different types of accounts and also may assign it a numerical ratings system. You may see such symbols as R1, R2, R3 or I1, I2, I3.The R or I indicates Revolving or Instalment and the numbers indicate the payment history of the account as follows;

• 0- account hasn't been used yet

• 1- paid as agreed

• 2- 30 plus days past due

• 3- 60 plus days past due

• 4- 90 plus days past due

• 5- 120 plus days past due

• 7- Collection account or bankruptcy

• 8- Repossession or foreclosure

• 9- Charged off or bad debt

The credit report will also show a record of any debts that have been turned over to a collection agency. It will show the date the collection was reported, the name of the company handling the collections and the company or lender that the loan was originally issued with and the balance remaining on the account.

Public Records

These are reports obtained from local, state and federal courts. They will indicate records of bankruptcies, tax liens and monetary judgments. Overdue child support records may also be shown. These public records will remain part of your credit history for seven to ten years and reflect negatively on your total credit score.

Inquiry Section

This section reveals any parties that have obtained a copy of your credit report over the last two years. There are generally two types of inquires, hard and soft. A hard inquiry is one initiated by you, whenever you apply for a loan or fill out a credit application. A soft inquiry comes in three forms; companies that wish to offer you promotional applications for credit, current creditors that are monitoring your account or credit bureau inquires requested by you, the consumer. These soft inquires do not show up on credit reports that businesses receive, only on copies provided to you. Although many lenders will view too many inquiries on your report as negative, it is important to note that two or more 'hard' inquires within a 14 day period count as just one inquiry.

Credit Score

The credit report can also reveal your credit score. A credit rating scores is a means of calculating an individual's credit risk to determine how likely they would be to make good on a loan. The score is a three digit number ranging between 300 and 850. The higher your score, the better it reflects on you as a borrower. A good credit rating score will enable you to negotiate for better interest rates.

Disputes

What if you should find an error on your credit report? Once you have discovered an error, contact the credit bureau that issued the credit report and state in writing what you found to be inaccurate. You will find the contact information listed at the top of your credit report.

The credit reporting companies must reinvestigate the claim within 30 days. They will then contact the party that submitted the item and attempt to resolve the dispute as quickly as possible. Remember, you have the right under the Fair Credit Reporting Act to dispute any inaccurate or fraudulent information that may appear on your credit report, and should do so in a timely fashion.

Once you learn to read and understand a credit report, you are moving towards a more secure financial future. Obtain your report today!

About The Author

Melanie Cossey is a successful home based freelance writer. Melanie writes many informative articles on the topic of credit, such as What is a FICO score and why is it important and Comprehending a Credit Report. To lean more about credit reports visit http://www.ultimate-credit-report.com for more on credit scores visit http://www.ultimate-credit-report.com/credit-score.html

---

Five Credit Card Billing Problems and How to Fix Them

It goes without saying that your first and best defense... Read More

The Art of Stoozing to Make Money from Credit Cards

Make Money from StoozingStoozing, this is a sophisticated method of... Read More

New Law Provides Free Annual Credit Report

As of Thursday, December 1, 2004, one-third of Americans will... Read More

What Can Happen to You as a Victim of Identity Theft, Facts & Figure

Is identity theft really that serious? Thousands of people every... Read More

A Summary of the Fair Credit Reporting Act

This summary of the Fair Credit Reporting Act will explain... Read More

Restore Your Credit Rating And Reduce Your Debts

Your credit rating affects many areas of your life. Opening... Read More

Lower Your Credit Card Interest Rate Now!

With today's credit card companies, there are many opportunities to... Read More

Identity Theft ? Monitor Your Credit Report

The recent security breach at credit card processor CardSystems Solutions... Read More

Credit Reports: Find out why you have been refused Credit.

You may already have 2 or more credit cards in... Read More

Credit Card Tips

Here are some useful credit card tips for you to... Read More

What is a Credit Report?

Ever wondered what is a credit report? If you've ever... Read More

Teaching Students To Keep Out Of Credit Card Debt - The Parents Role

Parents have the full responsibility for their children and their... Read More

Top 5 Credit Misconceptions

We have all heard the rumors?from neighbors, relatives or friends.... Read More

Which Credit Bureau Should I Use To Check My Credit Report?

There are three main credit bureaus in the United States;... Read More

Beware of Bogus Credit Repair Companies!

So-called "credit repair" companies claim they can remove negative information... Read More

How to Evaluate and Raise Your Credit Score

Why do some people get offers for pre-approved credit cards... Read More

Repairing Your Credit Score and Clearing Derogatory Marks on Your Credit Report

Raising your credit score can be a fairly simple and... Read More

Beware of Falling Minimum Payments

If you opened a credit card statement recently and were... Read More

What is a Bad Credit History?

A bad credit history can sometimes seem like a curse...... Read More

Credit Report ? Watch Out for Parking Tickets

The economic downturn of the last five years has affected... Read More

Maximizing Credit Card Rewards

In their quest to get you to sign up for... Read More

Make Sure Your Credit Report Is Correct to Improve Your Interest Rates And Lower Insurance Premiums

Did you know that you could make sure to get... Read More

Credit Reporting: How Does It Work?

In order to determine a consumer's credit worthiness, creditors and... Read More

Learn How to Improve Your Credit Score

Having a damaging credit record can hurt you in many... Read More

Credit Report Disaster Through Mistaken Identity

I've got some very important info I want you to... Read More

Credit Cards: What is the Universal Default Clause?

Most people who carry major credit cards are well aware... Read More

What is Credit Repair and How Can It Help You?

There are millions of consumer credit reports on file from... Read More

Check Your Credit Before Shopping For That Home Loan

Review Your Credit Score.Nearly every bank, credit union, and mortgage... Read More

Useful Tips on Borrowing Money

Here are some useful tips on borrowing money. Borrowing money... Read More

ChexSystems: Alternative Options for People Whove Been Checking Accounts

Individual banks elect to become members of ChexSystems, and to... Read More

Types of Credit Cards

There are a whole variety of different types of credit... Read More

4 Steps You Can Take If Your Online Credit Card Application Has Been Refused

Help! I've Been Turned DownYou received an envelope in the... Read More

Rewards Cards - Are They Right For You?

Rewards cards have become the latest rage in the credit... Read More