Credit Report – Tips For Understanding It

I consider managing my credit report to be a necessary evil. Even if you aren’t looking to borrow money, your credit score can effect many things in your life. This includes your auto insurance rate or your ability to get utility service without a deposit. Last but not least, it can even impact your ability to rent an apartment. It is important to understand your credit report whether you try to avoid using credit or you have many open accounts. Here is a simple overview and some tips for reading it and understanding its implications.

Your Credit Report – How Do You Get It?

There are three major credit bureaus – Transunion, Equifax and Experian. By law, they each owe you one free copy of your credit report each and every year. You have to go to annualcreditreport.com to obtain a copy each year…the bureaus will not automatically give them to you. Sometimes each bureau has different information, so I highly recommend checking all three. I have a reminder set in my phone to check one every four months. This means I get a consistent peek at my credit report and can monitor things more often!

What Will I Find On My Report?

Your report is a history of your credit usage. Most companies use it to gauge what kind of borrower you are and if they should risk lending you money. The report tells them many things about each of the loans you have had over the years. When I last checked mine it included past and present: utility accounts, credit cards, mortgages, auto leases and loans. Here is an overview of some other information it shows:

  • Your name, past names and last known address
  • Employer
  • A list of your loans
  • Payment history
  • Judgments or liens
  • Current balances

Terminology On Your Report

There are many terms I didn’t understand when I first read my report. Here are just a few definitions of some you may not be familiar with. Check them out Experian.com for even more terms:

  • Delinquent
    Accounts classified into categories according to the time past due. Common classifications are 30, 60, 90 and 120 days past due. Special classifications also include charge-off, repossession, transferred, etc.
  • Personal Information
    Information on your personal credit report associated with your records that has been reported to us by you, your creditors and other sources. It may include name variations, your driver’s license number, Social Security number variations, your date or year of birth, your spouse’s name, your employers, your telephone numbers, and information about your residence.
  • Revolving Account
    Credit automatically available up to a predetermined maximum limit so long as a customer makes regular payments.
  • Lien
    Legal document used to create a security interest in another’s property. A lien is often given as a security for the payment of a debt. A lien can be placed against a consumer for failure to pay the city, county, state or federal government money that is owed. It means that the consumer’s property is being used as collateral during repayment of the money that is owed.

Things To Double Check On Your Report

There are some things to lookout for when you are reading over your report. First, make sure that the personal information listed is for you and not a family member or another person with the same name as you. Each person has their own credit report defined by their social security number and personal information. It is important yours is actually yours.

Second, if you don’t know what something is under the Public Records section, follow up on it. Dispute it online or call the provided number. These things can cause you issues for years to come if not cleared up. Same with open accounts. If an account does not belong to you, make sure you dispute it.

Third, hard inquiries can lower your credit score. These fall off every two years. Make sure you recognize them and that you authorized them.

In Closing

Your credit reports do not contain your credit score. I have obtained my score by asking one of my lenders when it is pulled. Such as when I purchased my last home. An estimate of your score can also be obtained through many credit card companies.

Lastly, do not be intimidated by reviewing your credit report. Ignorance is not bliss. If something is incorrect use the online tools to dispute the information and get it right!

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