Knowing how to read your credit report can help prevent credit fraud, fix credit reporting errors and assist with building credit. Knowing how to read the report can help identify and report credit reporting errors mistakes, and knowing how to identify false credit inquiries may protect a borrower’s credit information and credit score. Additionally, knowing how to read a credit report assists with building credit because in cases of credit scores in need of repair, the report summarizes outstanding debt, number of creditors, credit related legal actions, and late payments.
Credit reports are a financial profile
To know how to read a credit report involves knowing what creditors will look for when they read your credit report. Creditors want to assess how high their lending risk is, and the credit report is a primary way to do this. They do this using a FICO score in addition to a credit report. Fair Isaac Corporation provides a general outline of what is in your FICO score and these things include credit history, types of accounts, debt to credit ratio, new credit and amounts owed.
After you know what creditors look for and how those things impact your FICO score you may be able to better identify what you are looking at when you read your credit report. For example, item 27 of the above sample TransUnion Report shows credit inquiries. By looking at this you can determine who’s been trying to pre-qualify or pre-approve you for credit, and how many times it has been done.
If the inquires are not directly related to applications you have made this may mean creditors have you on an active marketing list. Knowing this, you can then take steps to be removed from those lists. An effective way to do this is to request a credit freeze which limits access to your credit information. However, doing so prevents new credit from being issued from creditors whom you don’t currently borrow from according to the Federal Trade Commission.
Knowing how to read your credit report can be assisted by referring to the explanations provided with the sample credit reports in this article. Having done so, you can be better prepared to investigate your credit in the future. Moreover, by knowing how to read your credit report you can repair, contest or improve your credit in a more informed way. The Federal Trade Commission (FTC) provides useful information on how to dispute credit information contained within your credit report.
Credit reports provide creditors information:
Credit reports don’t have credit scores on them, but credit grades may be acquired when joining consumer lending networks as they sometimes require a public credit grade with which lenders can assess creditworthiness.
Information is placed and presented differently on each credit bureau’s credit report, however some similarities exists between them. For example, Equifax, TransUnion and Experian all have name and date information at the top of the credit report.Some information that is included on credit reports is listed below:
• Account history
• Personal information
• Employment history
• Account activity data
• Disputed credit
• Credit inquiries
• Debt to credit ratio
What a credit report looks like:
These sample credit reports from TransUnion, Equifax, and Experian reveal the details and formatting of credit information. Familarizing with these credit reports can help expedite the process when looking for erroneous credit information or simply reviewing correct information for ways to improve credit. The linked to sample credit reports have explanatory notes indicating what particular items on the report mean.
Looking at these sample credit reports it also becomes evident that address information is not necessarily at the top of the report along with name and date. For example, the TransUnion report indicates this information near the beginning of the report whereas Equifax includes it in the ‘Personal Information’ section. Depending on how you like to read information, one credit report may be easier for you to read than another.
Where to get a free credit report:
Free credit reports can most easily be obtained from http://www.annualcreditreport.com. This is the government authorized site for accessing free credit reports. Other sites may have purchase or service agreements connected to their ‘free’ credit reports so being weary about where you get you credit report from can save money.