How to Read and Understand Your Credit Report

Your credit report is your history. It is the only history someone you need credit from wants to see. All of your financial actions are listed on this report. If you have had any situations in the past where you paid late, or failed to make payment on a debt; the information is in your credit report. It is a good idea to obtain a copy of your credit report and to review it at least once a year. If the score is not what it should be, you should work at bringing your credit report score up. Learning how to read and understand your credit report can be very important to your financial security.

When you first get a copy of your credit report in the USA it is normal to want to check the credit score and pay little attention to the rest of the report. It is very important, however, to pay attention to all the information the report contains. Make sure your name is spelled correctly; verify your social security number and birth date. Mix ups can occur and if someone has gained access to your information and is using it fraudulently for the purpose of identity theft this is a key sign of this activity.

Next you will see the credit summary which reports information about the types of accounts you have currently. Here a lender can see the number, balance, and status of the accounts you have. It shows real estate accounts and mortgages you owe, revolving accounts like credit cards, lines of credit, installment accounts such as loans, and accounts that have gone to collection.

The next section is account history. Specific information on accounts you have can be found here. Creditor names, account names, account types, responsibilities, monthly payments, dates the accounts were opened, dates the accounts were reported to the credit agency, and balances owed are all listed. You will also find the credit limit or loan amount and if the account is a credit card you will find the highest and lowest amounts you have charged on the card. Past due amounts will be reported and any remarks a creditor has added to your account. Current payment status and your payment history can also be found here. This is not where you find information about accounts sent to an agency for collection.

The next section is public records, and this section will include information like bankruptcies, tax liens, late child support payments, or judgments. A public record usually stays on the report for seven years. Only the financial problems or crimes show up in this part of the report.

The last section shows credit inquiries. Here you will find a list of all parties who have requested a copy of your credit report for the last two years.

You should definitely obtain a copy of your credit report if you are planning to make a major purchase, believe your identity might have been stolen, or when you are denied credit.