More and more people are becoming aware of their credit report, and how it affects them in their daily lives. As they apply for a home loan, credit card, or line of credit, they realize that credit scores can make a huge difference in the amount of interest they will pay. Some have even realized to their chagrin that past indiscretions and problems can come back to haunt them. Being turned down for a loan can be very painful and embarrassing.
If you are ready for an intelligent look into your credit situation, then you may want to take a long look at your own credit report. When you have acquired a transcript of your credit report, it is plainly in your interest to understand how to interpret it. There are loads of numbers and distinct accounts on one piece of paper, and you should strive to understand what you are looking at, and what it all means.
Three major credit-reporting agencies
There are three pre-eminent credit reporting agencies that are going to play a big role in your credit life. The “Big Three” are Experian, TransUnion, and Equifax. You should copy a transcript of your credit report from these three companies, at the very least, every 12 months. You can find out additional information about these companies online and they will guide you how to acquire a no cost credit report.
The large credit scoring companies have fee-based websites, where you can look at your credit score whenever you’d like, see how your credit score has changed over time, and see any inquiries that have happened. You can even sign up for alerts that will let you know if anything has changed with your credit score. This can be a big advantage if you are trying to increase your credit score to get better interest rates.
What is in these reports?
All credit reports have similar information in them. They will have your identifying information, such as residence address, social security number, drivers licence number and other items. Each credit company will have payment history, late payment information and balance owed. There will be information from the public record if any exists. There will also be any inquiries from credit companies in the last months.
The three major credit agencies’ reports will have distinct information in them. This is because each company has different credit companies that subscribe to them, and that is how they get their information. The credit card companies, mortgage companies, and banks all send credit information on each creditor on a monthly basis. The agencies then tabulate all the credit information they receive about you, and come up with a new credit score.
In addition to the Big Three, a company called Fair Issacs also keeps credit score information for it’s customers. They also compute what is known as a FICO Score. Fair Issacs is considered the “Father of Credit Scoring,” since they were the first to devise the credit score as a way to make lenders’ jobs easier.
The major parts of a credit report
A credit report is separated into four sections, identifying information, credit history, public records, and inquiries.
Your identifying information is the section that identifies who you are. There are maybe hundreds of people in the United States having an identical name (can you imagine how many John Smith’s there are?), but all people has a discrete social security number. The report should also confirm your driver’s license number, last known address, and unique phone number.
The second section of your credit report is your credit history. Each individual’s account will have the name of the creditor and the creditor’s account number. You will want to make certain that these are authentic accounts that you maintain now or had at one period. If they are incorrect, you will be shown a way to contest them.
This is the section that obtains any report about your past criminal record. This will also contain any arrests or bad judgments that have been made against you. This is a section that is better off empty for obvious reasons.
The last part to a credit report is the inquiries. This is anyone who has seen a transcript of your credit report. Anytime that you apply for a loan, credit card or line of credit, some one can see your report and they will pull an inquiry report. This is a very complete report. It is not a good practice to show a lot of inquiries on your credit report.
Changing your credit report
If there is any part of your report that is in question, you will have a way to dispute or correct it. The dispute will be reviewed and the questionable information may be taken off your credit report. If it cannot be taken off of the report, you should have a way to add your own explanation of the situation to the report. This could help a potential lender understand the situation more fully.
I hope that this article has given you a basic understanding of what is in your credit report, and what you should look for when reading your credit report. To find the credit agencies, do an online search for their websites.
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