Reading Your Credit Report

One of the best ways to protect your financial interests is to keep a close eye on your credit report. You should review your reports from all three major bureaus at least twice a year, but many people don’t know how to make sense of the information contained within the reports. This article will help you to read and understand your credit report, and understand credit card debt relief programs.

Before you start wading through your credit report, you should know that your credit information is reported to three credit bureaus- TransUnion, Experian, and Equifax. Each one collects and uses your information a bit differently, and lenders and creditors may not read all three. However, it’s wise for you to get copies of all three reports, because this will make it a lot easier for you to spot mistakes.

Your credit report is split into four parts. The first section holds your personally identifiable information, like your address, name, birthdate and driver’s license number. It will probably also contain your past addresses, spouse’s name, and the names of your past and current employers.
The second section is your credit history, where your creditors’ names, addresses, assorted account numbers, and other information can be found. For each separate account, the report will outline the type of account, and show whether it is single-payor or jointly owned. It will also tell whether the account is open, paid off, closed, or charged off. This information tells lenders of the potential risk of lending money to you.

The third part shows items that are public record- things like bankruptcies, liens, judgments, and sometimes even criminal acts. Make sure this section is accurate, because this section is the single biggest factor in determining your credit score. Lenders will often ignore a late payment or two, but blemishes here can dampen your ability to get credit. The fourth part shows how many companies have inquired about your creditworthiness. Too many inquiries in a short time can damage your score, but soft inquiries don’t impact it at all.

Understanding credit card terminology can allow you to be in control of your finances. You will be a better decision maker, and a little knowledge goes a long way in building a good credit history.