Tips for Understanding a Credit Report

A credit report can be intimidating if you do not know at what you are looking. Many different symbols, words, and numbers appear on your credit report. If you do not know how to read a credit report, you may find the same to be a complete jumble that is unhelpful to you in discovering your current credit situation. However, the good news is that this problem is easy to overcome. If you learn a few things about credit reports, you should be able to effortlessly flow through the information in a short amount of time.

If you think of a credit report as a map, you will be able to easily read everything. A credit report, like a map, has a legend contained somewhere within the report (usually on the bottom of the report). Without the legend, you probably will not be able to decipher the numerous initials and abbreviations that appear on a credit report. However, a quick look at the legend will solve any difficulty that you may have in reading the credit report.

It is important to know that a credit report will have three columns. Each column represents one of the three credit bureaus (Equifax, Experian, and TransUnion). Each column will show you the accounts that have been reported to each respective credit bureau. As such, some columns may have more accounts than others. Additionally, the columns are not uniform. Therefore, even if an account is reported by all three credit bureaus, the account may not show up in the same place for each bureau. As such, when you are analyzing your credit report, you have to make sure that an account is accurate for all three credit bureaus (or for all the credit bureaus that the account is reported on) if such account has been reported.

Another thing you have to be aware of when analyzing your credit report is the “Inquiry” section of the report. This section shows a list of every entity that has requested a copy of your credit report. This is important because too many inquires within a specified timeframe will lower your credit score. Additionally, this section is important so that you can see who has been looking at your credit.

Another point that you need to be made aware of is that your credit report is a snapshot of your credit situation at the moment that you request it. Therefore, your credit report for today may change tomorrow. Additionally, there is a lag time between an occurrence that affects your credit report and the posting of such occurrence on your credit report. For example, if you obtain a new credit card account, this affects your credit report. However, it may take a few weeks or even a few months for this account to post on your credit report.

A credit report is an important financial tool. If you learn how to analyze yours, you will be in a better position to analyze your financial position.