Now that we know it’s important to get your free credit report every year, lets take a minute to talk about how to read your credit report. I know looking at your credit report and figuring out how to read it can be quite daunting at first, which is one reason many people simply don’t bother. However, once you have learned what it all means, you won’t have any problems reading your credit report.
If you read last weeks installment of my series you learned how to get a free copy of your credit report. If you haven’t done that yet, take a minute to go check out that post and then get your credit report. Once you have it, then hop back here and we can begin. You will also want to grab two different colored highlighters or ink pens, one you will use to highlight any misinformation and the other you will use to highlight the last “date reported” under each negative account you have.
How To Read Your Credit Report
Your credit report contains four parts, your identifying information, public records, credit history (both good and bad) and inquiries. Each of these sections are important in their own right, so lets get started.
In this section you will find your name, Social Security number, your date of birth, addresses (both past and present). Occasionally there can be other identification information posted there such as past or present employment. Look over this section carefully, there are often mistakes listed in this section including wrong addresses, misspellings of your names or even a wrong last name. On my credit report I was listed as having a last name of my ex-boyfriend even though we were never married and I never used his last name on any paperwork, but because we were living together someone, somewhere gave me his last name.
Public records is the next section on your credit report. This area should preferably be blank, if it isn’t that means these things are not only showing on your report but are available to any Joe Shmo who wants to check into you through your public record. These can be things like bankruptcy, judgments against you after being sued, tax liens, delinquent child support payment, etc. They typically stay on your record for 7-10 years depending on the infraction.
Credit HistoryThis is where you will find most of the information contained in your credit report. In the credit history section you will find a list of your loans including student and auto, mortgage, and personal loans. Your revolving credit such as credit cards, store cards, and gas cards are also listed in this section. Anything you have opened even if it has been paid off over the course of the last seven years is listed here.
Other information such a late payments, high credit limit, total loan amount, and how many payments you have made are all listed in this section. Your Negative and Positive credit history have their own sections so that anyone looking at your credit report can quickly see how well you have paid on your accounts.
You will want to read and re-read this area over again to make sure all of the information here is correct. It is not uncommon for there to be several mistakes listed here. In fact, upwards of 30% of credit reports have errors where the consumer paid an account in full then closed it and yet it is not listed that way on their report.
Unless you have been carefully monitoring and working to make sure your credit report is accurate, your highlighters are going to get a lot of use in this section!
Anyone and everyone who has asked the credit reporting agency to take a look at your file is listed here. These inquiries can be soft meaning they are from companies that want to send you some type of promotional material, think credit card offers in your mail box. Or, they are hard inquiries which occur when you are applying for a loan or credit card or sometimes services like utilities, or cable/satellite TV.
Now that you have a better understanding of how to read your report we can take a look at how to correct any mistakes that have been made. If you have missed any part of this series you can get caught up easily by reading Debt Repayment ~ Getting Started fallowed by How To Get Your Free Annual Credit Report.
*All of the information I will be sharing with you over the next few weeks comes from research that I have done when dealing with my personal debt. I am not a financial adviser. For your own situation you may need to contact a financial adviser or even a lawyer.
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