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How to Read a Credit Report

how to read a credit report

If you’ve ever opened a credit account, no matter whether it was a student loan, a credit card, or a car loan, you have a credit history. When you want to apply for another loan, the bank or lender will take a look at your report to determine whether they want to lend you money. In some cases, employers look at your report before offering you a job. Knowing how to read a credit report and how to understand the information on it is important for your financial well being.

Where to Get the Reports

You have a few options when it comes to getting your credit reports. In the US, there are three national credit reporting agencies: TransUnion, Experian, and Equifax. Each company creates its own report about you based on your loan history, payment history, and public information such as a history of bankruptcy or judgments against you.

You’re allowed to get a free copy of your credit report from each agency once a year. The easiest way to get your report is to visit annualcreditreport.com and fill in your information. You can either choose to receive all three reports at once or to visit every few months and review each report one at a time.

What’s on It

Although each report is slightly different, all three contain the same basic information: your personal information, such as past and current address, Social Security number and phone numbers. The information on your credit report might include a misspelling of your name or an address you never lived at. In most cases, this means a creditor filled in the information incorrectly. In some cases, it means someone’s been using your information fraudulently.

Each report will also show your credit history, including currently open accounts and some closed accounts. The reports will detail what each account is, how much you’ve owed on the account and whether you pay as agreed.

Information about your financial history in public records is also included in your reports. The public records information only relates to your financial history. If you were arrested or sued for reasons unrelated to your finances, that won’t appear on your credit reports. The final section of the report lists credit inquiries, which are companies who looked at your credit history recently.

Separating the Good from the Bad

Part of learning how to read a credit report is learning what’s good and what’s bad on each report. Negative information includes a history of late payments or a statement that you paid a debt 30, 60, or 90 days late. A charged-off account is also bad news because it means that you stopped paying your debt, and the creditor gave up on you. Information about a bankruptcy, tax lien, or other financial judgment against you is also a negative on your report because these things can keep you from getting credit in the future.

Inaccurate information in your report should also be a red flag. In some cases, it can just be a reporting error. In others, it can be a sign of identity theft. Look at each account on your report closely. If you don’t remember opening it, contact the credit reporting agency and report the error. The agency must look into the issue. It will either resolve the issue in your favor or let you know why it thinks the information is correct.

To avoid any surprises when applying for a loan or a job, it’s a good idea to have a firm grasp of what’s on your credit report.

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