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How To Read Your Credit Report
By: Tom Koziol
The Fair and Accurate Credit Transactions Act, signed into law on Dec. 4, 2003,
gives every American the right to a free credit report every year from each of
the three major credit bureaus -- Equifax, Experian and TransUnion.
What the law doesn’t do is give every American the ability to read their credit
report. Not one word in the law says the credit bureaus have to write it in
plain, easy-to-understand language. Go to http://www.ftc.gov and click on
consumers then credit and read it for yourself. Hopefully you’ll stay awake .
While all credit reports follow a basic format, some vary so what you are about
to read doesn’t apply across the board. If you didn’t get it directly from one
of the bureaus mentioned above, your best bet for a translation is the source
providing your copy.
Here is the four part skeleton most bureaus use. Part one is your identifying
information. This would be information like your name, social security number,
previous addresses, current address, date of birth, driver’s license number,
telephone number, spouse’s name and your employer and length of employment. As
with all sections, pay close attention because chances are pretty darned good,
some of it is wrong.
It is wrong because this information comes to the bureau from a myriad of
sources and the bureau doesn’t take the time to update or correct it. That
leaves you as your own correcting agent.
Part two is your credit history. This is usually the longest part of your report
because you probably have had department store accounts, multiple credit cards,
multiple bank and other financial institution loans, mortgages, car loans, lines
of credit, home equity loans and other transactions involving credit.
Sometimes you will see the bureau calls these accounts trade lines. No big deal
because they are still your accounts.
These accounts usually start with when you opened the account then tell the type
or kind of credit (installment, car loan, personal loan, etc.) and whether it is
in your name or someone else is on the account with you. The total amount of the
loan with your high credit limit or if it is a credit card, your highest balance
follows. The next thing it shows is how much you still owe and if the payments
are fixed or minimum monthly amounts. Your status, open/inactive/closed/paid,
follow your payments then comes the item everybody wants to know, how well
you’ve paid on the account.
This is where the bureaus list if you are late, and if late, how late and how
often you’ve been late. If you are not late, it will show you pay on time.
Part three is called Public Inquiries or Public Records. This is where tax
liens, judgments, foreclosures and bankruptcies are listed. You want this part
to be blank and I do mean blank. If you see anything here, attempt to correct
immediately if not sooner.
Part four is the Inquiries section. It is divided into two parts. Part one are
the inquiries you initiate by filling out a credit application. This section is
generally referred to as the hard inquiry section because you are the initiator
of the inquiries.
The second part is called the soft inquiry section. What you’ll find here are
the names of companies who have sent you offers of credit or current creditors
who are monitoring your account.
Sometimes there is a fifth section called Remarks. Read it because you never
know who reported what about you.
Each credit report bureau places an explanation of terms usually on the backside
of the report pages. In it, they explain what the numbers and letters you see
next to your accounts mean. So, if you see something like I9, don’t fret as it
should be defined in the explanation of terms.
Of course, I9 could be negative, so you may have to fret. Either way, you are
now almost totally armed to deal with that free credit report the law said the
bureaus had to give you.
Good luck and may all your credit be A+.
About the Author:
Tom Koziol wrote “Credit Card Capers: Exposing All Their Dirty Tricks” as an
expose on how the banks are robbing consumers via their credit cards. Get the
dirty lowdown at http://www.creditcardcapers.com |
