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Discover the Parts of a Credit Report and What They Mean
So you ordered a copy of your credit report to check for
inaccuracies and get the most from your credit score. Now how do
you read it? Your credit report is read and used by any number of
people you deal with on a daily basis, from your landlord to your
employer to a potential lender. Fortunately, it has gotten easier
to order a copy of your report, but it's not so easy to
understand what all those abbreviations and numbers mean once
you've got it.
If you haven't ordered your credit report yet, you will soon
be entitled to a free copy from each of the three major credit
bureaus, Equifax, Experian, and TransUnion. Some states can
already take advantage of this new policy, but people living in
eastern states will have to wait until September of 2005. Order
your free yearly copies from all three agencies and check for the
availability of the annual reporting program in your area at the
same website: www.annualcreditreport.com. Each report will
contain different information because retailers and creditors
only report to the agency in their area or with whom they have an
agreement.
Once you have your credit report in your hands, you will see
that it is divided into four main sections:
? Consumer information
? Account histories
? Public records
? Inquiries
Double check the accuracy of your identifying information.
This will include your name, address, phone number, previous
addresses, date of birth, and Social Security number (SSN).
Next, for each account history, or trade line, you will see
the following information:
? Date you opened the account
? Type of credit account (either installment, such as a car loan
or mortgage, or revolving, such as a credit card)
? Name(s) on the account
? Total loan amount, credit limit, or highest card balance
? Amount you currently owe
? Amount of your monthly payment
? Account status (either open, closed, inactive, paid, or
other)
? How promptly you have paid on the account
Credit agencies vary as to how they word various sections of
the report and should provide you with a guide to reading their
versions. One agency might report in the last column of an
account history that you paid "on time" or "30 days late."
Another agency might use a numeric code to rate how well you paid
off a debt. R1 is the code used for an excellent repayment
history on a revolving charge account. I1 is the code used for an
excellent repayment history on an installment account. Obviously,
the higher the number next to either the R or I, the lower your
repayment history is rated. So an R4 would indicate a history of
late payments.
The public records section will include any tax liens,
bankruptcies, judgments, or other financial-related legal
matters. Depending on the type of action taken, these damaging
records may stay on your credit report for up to 7 to 10
years.
The last section lists the inquiries made on your credit. Hard
inquiries are those requests to pull your credit when you apply
for such things as loans or lines of credit for services. Soft
inquiries result when companies sending out promotional items to
pre-qualified individuals check your history or when your current
creditors check your payment status. The soft inquiries only show
up on the report that you order, not on reports pulled by
lenders.
While too many inquiries in a short period of time can signal
a red flag to a lender, most credit scoring models are least
affected by this portion of your report.
Check your report for any errors and report them immediately
in writing. If you have experienced damage to your credit, go to
http://www.creditdamage.com to find out what you options are.
Don't forget that the credit agency providing your report is
also a great source of information on not only reading your
credit report, but raising your credit score.
Cathy Taylor is a marketing consultant with over 25 years
experience. She specializes in internet marketing, strategy and
plan development, as well as management of communications and
public relations programs for small business sectors. She can be
reached at Creative Communications: creative-com@cox.net or by
visiting http://www.menopauseinfo.org or
http://www.internet-marketing-small-business.com
MORE RESOURCES:
Credit - Google News
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