The Copy Of Your Credit Report - How To Read It

How to Read Your Credit Report

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If knowing how to read your credit report isn't all that high on your list of priorities, you may want to rethink that. Since your personal credit report represents the standard by which all banks, lending institutions and other financial entities measure your overall credit worthiness — or in the simplest terms, your ability to pay back loans — understanding your personal credit report is crucial.

Your personal credit report is broken down into six (6) main sections:

  1. Personal information – This area lists all available information about you, including your date of birth, where you currently live and past addresses — plus other personal details, such as your current employer. There is also a sub-section for consumer statements. Consumer statements can be included in your credit report, and they represent your chance to explain a particular credit discrepancy, problem or issue. If you choose to add a consumer statement to your credit report, you can do so by contacting any of the three major U.S. credit bureaus directly — TransUnion, Experian and Equifax.

  2. (Credit) Account summary – This is an at-a-glance summary of your entire account history, and it shows active/open and inactive/closed accounts in your name, as per the three main credit bureaus. NOTE: The public records section is usually marked "0" (for zero) unless you have ever declared bankruptcy, had a home foreclosure or had anything in your credit report information history that has become a matter of public record.

  3. Personal payment history – This section details your payment history for all credit accounts. You'll see mortgages, or real estate accounts, installment and revolving credit accounts (such as credit cards), accounts in collection and any other accounts in your name — all as they relate to each of the three credit bureaus.

  4. Public information – Like the public records notation in your account summary, this section provides specifics on anything in your overall credit report information that is a matter of official public record — such as bankruptcies, tax liens, foreclosures and any other legal actions relating to your personal credit.

  5. Inquiries – This area lists businesses and agencies that have inquired about your credit during the last two years. For instance, when you apply for credit, the lender will submit an "inquiry" to each of the credit bureaus about your overall credit history.

  6. Creditor contacts – Here you'll find contact information — such as mailing address, phone number or website address — for all of your current creditors.

How often do I need to check my credit report?

The biggest problem many consumers seem to have is ignoring their credit report altogether — only paying attention when they are turned down for a loan or they find they have difficulty getting a mortgage. For that reason, you should check your credit on a regular basis. And there has never been more information available to do just that — check your credit regularly — than right now. Not only is it your legal right to request a copy of your credit report at any time — either through the mail or via an online credit report — there are also a variety of services that offer credit report monitoring. Such services automatically alert you to any changes in your credit report, and then it's up to you to investigate the specific issue, problem or discrepancy.

Will my credit scores vary by individual credit bureau?

The simple answer is "yes." Your credit scores may vary only slightly, or they may vary by 100 points or more. While you're entitled by law to receive a free credit report each year from each of the three main credit bureaus, these reports do not include your scores. Plus, each report is, by nature, a single-bureau credit report, providing you with only one-third of your complete and updated credit information.

Also, if you only check your credit report once a year, you won't stay up-to-date on your credit score for 12 months, which can leave you without an effective tool for determining the best time to apply for a mortgage or car loan. Beyond that, you may not be aware of unauthorized changes to your credit report that can adversely affect your score — and provide an early sign of a risk of identity theft.

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