Credit Card Advice on How to Read A Credit Report

Written by , September 10, 2012

Credit Card Advice on How to Read A Credit ReportYour credit report and credit score are of the highest importance in maintaining healthy personal finances. Nearly all decisions on whether or not to extend credit to a prospective borrower are made with detailed calculations based on information contained in your credit report. Furthermore, many employers and landlords will use an applicant’s credit report to decide their suitability for a job or apartment.

Much of the information behind your credit score is available to you any time you want. In fact, federal law requires that the major credit reporting bureaus provide you with a free copy of your credit will each year.

Once you obtain copies of your reports, here’s some credit card advice on how to read and understand them.

  • Personal Information. Each credit report will include a section that lists your personal information. At a minimum, this will include your legal name, year of birth, current and prior address information, current and prior employer information, and your current telephone number. Some agencies only report the last two addresses, while others report a much more extensive history. Note that for security purposes, your credit report will likely not display your full Social Security number.
  • Accounts in Good Standing. This is likely to be the single largest section on any particular credit report. This lists all current accounts that you have open, and which you are currently repaying according to your account terms. These will include any revolving lines of credit (including your credit cards), any installment loans such as your student loans, and any home mortgages you have. The listed information will generally include details about the account such as how long it has been open, your credit limits, whether it’s a joint or individual account, and other relevant information. This list of accounts also often includes information about credit that you may have used in the past, but which is no longer outstanding, such as fully repaid student loans, mortgages, and closed credit card accounts.
  • Negative Accounts. A negative account is one in which the creditor believes you have not paid according to your account terms. Most often this means a late or missed payment. Any negative account information will generally remain on your credit report for seven years.
  • Collections. A collection is where one of your creditors has turned your account over to a collection agency because of their inability to collect amounts they believe are due to them.
  • Public Records. Some credit agencies issue reports with a section on public record information. This section will generally include information related to any bankruptcy proceedings you are subject to, as well as any judgments or liens that are set forth in any federal, state or county court records.
  • Inquiries. A section on inquiries, or requests for your credit history, is often the biggest surprise for many individuals. This section lists any requests that have been made, and you’ll see that these requests come from prospective employers, your bank and credit card companies (which often request your credit report periodically to verify that you’re still a good credit risk), and other entities.
  • Reviewing your credit reports each year is an essential part of good financial health. Make sure there are no errors in any report, and contact the applicable credit agency as soon as possible if you discover any.

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