CREDIT SCORING
How To Read Your Credit Report
by: Tom Koziol
The Fair and Accurate Credit Transactions Act, signed
into law on Dec. 4, 2003, gives every American the right
to a free credit report every year from each of the three
major credit bureaus -- Equifax, Experian and TransUnion.
What the law doesn’t do is give every American the
ability to read their credit report. Not one word in the
law says the credit bureaus have to write it in plain,
easy-to-understand language. Go to http://www.ftc.gov
and click on consumers then credit and read it for yourself.
Hopefully you’ll stay awake .
While all credit reports follow a basic format, some vary
so what you are about to read doesn’t apply across
the board. If you didn’t get it directly from one
of the bureaus mentioned above, your best bet for a translation
is the source providing your copy.
Here is the four part skeleton most bureaus use. Part
one is your identifying information. This would be information
like your name, social security number, previous addresses,
current address, date of birth, driver’s license
number, telephone number, spouse’s name and your
employer and length of employment. As with all sections,
pay close attention because chances are pretty darned
good, some of it is wrong.
It is wrong because this information comes to the bureau
from a myriad of sources and the bureau doesn’t take
the time to update or correct it. That leaves you as your
own correcting agent.
Part two is your credit history. This is usually the longest
part of your report because you probably have had department
store accounts, multiple credit cards, multiple bank and
other financial institution loans, mortgages, car loans,
lines of credit, home equity loans and other transactions
involving credit.
Sometimes you will see the bureau calls these accounts
trade lines. No big deal because they are still your accounts.
These accounts usually start with when you opened the
account then tell the type or kind of credit (installment,
car loan, personal loan, etc.) and whether it is in your
name or someone else is on the account with you. The total
amount of the loan with your high credit limit or if it
is a credit card, your highest balance follows. The next
thing it shows is how much you still owe and if the payments
are fixed or minimum monthly amounts. Your status, open/inactive/closed/paid,
follow your payments then comes the item everybody wants
to know, how well you’ve paid on the account.
This is where the bureaus list if you are late, and if
late, how late and how often you’ve been late. If
you are not late, it will show you pay on time.
Part three is called Public Inquiries or Public Records.
This is where tax liens, judgments, foreclosures and bankruptcies
are listed. You want this part to be blank and I do mean
blank. If you see anything here, attempt to correct immediately
if not sooner.
Part four is the Inquiries section. It is divided into
two parts. Part one are the inquiries you initiate by
filling out a credit application. This section is generally
referred to as the hard inquiry section because you are
the initiator of the inquiries.
The second part is called the soft inquiry section. What
you’ll find here are the names of companies who have
sent you offers of credit or current creditors who are
monitoring your account.
Sometimes there is a fifth section called Remarks. Read
it because you never know who reported what about you.
Each credit report bureau places an explanation of terms
usually on the backside of the report pages. In it, they
explain what the numbers and letters you see next to your
accounts mean. So, if you see something like I9, don’t
fret as it should be defined in the explanation of terms.
Of course, I9 could be negative, so you may have to fret.
Either way, you are now almost totally armed to deal with
that free credit report the law said the bureaus had to
give you.
Good luck and may all your credit be A+.
About The Author
Tom Koziol wrote “Credit Card Capers: Exposing All
Their Dirty Tricks” as an expose on how the banks
are robbing consumers via their credit cards. Get the
dirty lowdown at http://www.creditcardcapers.com.
The above article is copyrighted and may not be reproduced
without permission of the author.
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