You can probably tell me what your credit score is. But, can you tell me what your credit report says? The ability to read and understand your credit report can help you spot and rectify issues, get you back on track with your credit, and help you gauge your current creditworthiness. If you don’t understand your credit report, how can you make positive changes? I’m going to walk you through a step-by-step guide to understanding your credit report. I want you to understand what you are reading!
Your credit report is set up in four main sections: Personal information, Credit and Account History, Public Records, and Credit Inquiries. It’s important to review each section carefully to confirm your credit report is accurate and there’s no sign of fraud.
If you ordered your credit report from each reporting agency (Equifax, Experian and TransUnion), then make sure you are comparing all 3 to each other to ensure each agency has the same or most accurate information. If you have a combined report, you will be able to see information relative to each agency on one document. You should be comparing in this case, as well. Now, let’s get into each section.
Section 1: Personal Information
This section includes your personal information as it appears in your credit file. This information consists of your name (or AKAs), Date of birth, SSN, recent addresses (typically the 3 most recent), and your current or previous employers. Unless you move or switch jobs, this information is not very likely to change. Previous addresses and employment might also be included.
Notice an incorrect spelling of your name? No worry. According to The Balance, “It’s not uncommon to have variations or misspellings of your name. Most credit reporting agencies leave these variations to maintain the link between your identity and the credit information. Having different variations of your name and old addresses won’t hurt your credit score as long as it’s actually your information.”
Section 2: Credit and Account History
This is the largest section of your credit report. This section will list every credit account you have, open or closed within the last 7-10 years. Each individual account will list the account name or creditor, account number, account type (installment, revolving), account status (open, inactive, paid or closed), monthly payment amount, total credit limit, total credit used (balance), and how well you have paid the account in the past 24 months. Collection and delinquent accounts may also show in this section, or in the public record section.
It will include the following account types:
- Real Estate Accounts – Any mortgages that you have.
- Revolving Accounts – Any credit cards and lines of credit.
- Installment Accounts – Any loans not related to real estate, such as car or education loans.
- Other Accounts – Any miscellaneous accounts that don’t fall into the other categories.
- Collection Accounts – Any accounts that have been sent to collections.
Specific information in relation to each account will also be included in this section of your credit report. Each account will contain the several pieces of information:
- Creditor name, or who’s reporting the information.
- Account number associated with the account.
- Account type.
- Type of responsibility. This indicates whether you have individual, joint, or authorized user responsible for the account.
- Monthly payment, the minimum amount you are required to pay on the account each month.
- Date opened. The month and year the account was established.
- Date reported is the last date the creditor updated the account information with the credit bureau.
- The amount owed on the account at the time data was reported. This information could be up to 30 days behind, depending on when it was reported and when your credit was pulled.
- Credit limit or loan amount.
- High balance or high credit is the highest amount ever charged on the credit card. For installment loans, high credit is the original loan amount.
- Past due. Amount past due at the time the data was reported.
- Comments and remarks made by the creditor about your account.
- Payment status. Indicates the status of the account, i.e. current, past due, charge-off. Even if your account is current, it might contain information about previous delinquencies.
- Payment history. Indicates your monthly payment status since the time your account was established.
Section 3: Public Records
This section will provide information on any liens, financial judgments, wage garnishments, overdue child support or alimony, foreclosures, and bankruptcies. Hopefully this section is empty, as it can hurt your credit score. Public records can remain on your credit report up to 7-10 years.
Section 4: Credit Inquiries
This section will list the names of the companies who have requested and obtained a copy of your credit report. This is usually any company or lender you may have applied for credit with. This will also include any landlord, insurance company or bill payment company who has requested your report.
This section will tell you who obtained your report and when. One thing to keep in mind is that this section will contain soft and hard inquiries.
A soft inquiry usually occurs when you are being reviewed for a background check, a “pre-approval” offer, or when you check your own report. Soft inquiries do not affect your score. A hard inquiry is when your report is reviewed in determination of new credit. This does affect your score. Only hard inquiries are shown to lenders.
Your credit report may seem intimidating, at first, but it can shed light on some really great information. Leverage your credit report at least once a year to make sure you are always aware of what is being reported on your behalf. As you continue to pay down debts and build credit history, your report and score will reflect it. Stay consistent and remember that credit is important. Do you have any questions about reading your credit report? Have you ever found something that didn’t belong? Share your experiences and questions by posting a comment below!