Navigating a credit report can be a bit confusing but it is important to understand how all of those numbers affect you whether or not you are considered credit worthy. A credit report is broke into four basic sections and each one is important to your credit score.
The first section contains your identifying information
This is just the basic information that identifies who you are. It can include a list of addresses where you have lived, your name and any other names you have gone by, your social security and driver’s license numbers, spouse’s name, date of birth and telephone numbers that have been linked to your name.
The second section contains your credit history
This section will list all of the credit accounts that you have. It will tell how long you have had the account, what kind of account it is, if it is a joint account, amount that the loan was for or the credit limit you have, total amount that you owe, amount of monthly payments, Status of the account, and if you have been making your payments on time. This section might also include notes that tell if you typically pay late or have a debt that was never able to be collected.
Residents of Colorado, Maryland, Massachusetts, New Jersey, and Vermont are entitled by state law to one free credit report from a credit-reporting agency per year. Residents of Georgia are entitled to two free credit reports.
The third section contains your public records
This section includes any bankruptcies, tax liens, or judgments against you. If it is in the public records, it will show up in this section of your credit report.
The fourth section contains inquiries
Anytime someone requests your credit report, that information goes into this section. That means that every time you fill out an application for credit, that credit request will be noted on your credit report. Not all inquiries on your credit report were initiated by you. Soft inquiries are those requested from companies looking to contact you unsolicited and offer you a pre-approved loan or credit card.
If you’re going to apply for a credit card, a mortgage, a loan or any other source of finance, one thing any potential lender will check is your credit report. This will tell them about any previous unpaid debts or judgments against you, and help them assess whether you are creditworthy or not.
There are three three nationwide consumer reporting companies in the US: Experian, Equifax and TransUnion. All keep different information about you, and all or any of them may be referred to by a potential lender.
If you are thinking of applying for credit, therefore – and especially if you have ever been turned down in the past – it is important to find out what these companies have on their records about you. And because all three companies are independent, you need to check on all of them.
The good news for consumers is that as from September 1, 2005, everyone in the US is entitled to a free copy of their credit report from each of the consumer reporting companies once a year.
To get free copies of your credit report, you should not apply to the three companies directly. There is only one website that is authorized to give out free credit reports, and this is at annualcreditreport.com You can also get your free credit report via telephone by calling 877-322-8228.
Credit Tip! 5.
Beware of credit-repair scams. Sometimes doing it yourself is the best way to repair your credit. The Federal Trade Commission’s “credit repair: How to Help Yourself” explains how you can improve your creditworthiness and lists legitimate resources for low-cost or no-cost help.
If you find a mistake on your credit report – for example, a debt that isn’t yours or a disputed amount – you’ll need to fill out the form that comes with the report, or follow the instructions on the explanatory sheet. Upon receipt of a challenge, a credit reporting agency must investigate the claim, usually within 30 days.
Credit Tip! Even accurate data in your credit report must be deleted if it’s not verified.
As long as a charge is in dispute, it will still show up on your report. Long-time lenders say it’s common for reports to have errors. Some estimate that as many as 80 per cent of all credit reports contain some kind of misinformation. So it really is important to take advantage of this free opportunity to check your credit report, even if you’re not currently planning any finance applications.