December 9, 2009
Credit Report Review – Easy as 1, 2, 3
Have you ever read your credit report? Okay, have you read it and understood what is contained on its pages? If not, continue reading to gain an understanding of how to read your credit history and to understand certain terms, such as “charge-offs” and “inquiries,” which may be included on your report.
The importance of your credit report should not be under-stated. Every step you take financially for the rest of your life will rely on what your credit score is. This means that it is extremely important to be knowledgeable and aware of the contents of your credit report.
So, the first step is to obtain a copy of your credit report. You can do this by contacting one of the three major credit reporting agencies (Equifax, Experian, or TransUnion) to request a copy. These credit reporting bureaus are legally required to provide you with one free copy of your credit report once every year, upon your request. Alternately, you can contact Annual Credit Report at (877) 322-8228 to obtain a copy of your credit report.
Reading a credit report can be confusing to say the least. So, let’s take some of the mystery out of this process. A credit report is broken up into several different sections. These sections pertain to categories such as identifying information, credit history, public records, and inquiries, and should be readily identifiable on your credit report by their titles or headings.
“Identifying information” is normally the first section of a credit report. Here you will find basic information such as your name, date of birth, and current and prior addresses. Check this section to make sure all the information is noted correctly and there are no errors. Even an incorrect zip code listing can affect some requests for credit.
The next section should pertain to your “credit history.” This section will contain all the financial information that the credit bureau has on file for you. The items listed will report information such as what type of credit account (Is this a mortgage, car loan, credit card, etc.?), the amount owed (What is your balance?), payment details (Are you behind? Do you pay on time?), and the current status of the account (Is this account current, paid in full, past due, charged-off, etc.?).
Are you wondering what a “charge-off” is? Having a charge off on your credit report means that a credit company has suspended the account and written off the debt. Once the credit company wrote the debt off, they likely passed the debt on to a collection agency. Once this has been done, the only way to remove the “black mark” from your credit history is to pay the debt in full.
“Public records” comprises the next section of the credit report. This section will report any bankruptcies or court judgments you may have against you. As you can imagine, these are the worst type of records to find on a credit report so it is best if this section lists nothing.
The “inquiries” portion of the credit report is the final section. Here you will find information related to requests which have been made regarding your credit report, such as when lenders have requested copies of your credit report prior to approving or denying your credit application. It is wise to keep in mind that lenders are wary of credit reports where there are numerous inquiries within a short period of time. As such, it is best to limit the number of inquiries on your credit report.
The purpose of reviewing your credit report is to note any inaccurate or false information and work to get it revised. If you should find one or more mistakes on your credit history, you can write to the appropriate credit bureau and request that the information be corrected. Be sure to include copies of any information or documentation you have which substantiates your claim. If you are successful in getting inaccurate or false information corrected, this will positively impact your credit score and this is, after all, the reason for taking the time to sit down and review your credit report.
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