How to Read and Understand Your Credit Report

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The Ultimate Guide To Credit Reports & Scores Articles – Credit.com

If you miss payments or make partial payments, or if there’s been an error, it can leave you with a bad credit message or note. These messages can linger on your credit report — not forever, but for years. Bankruptcies and consumer proposals stay on your credit report for up to seven years from the date of discharge for your first occurrence, and even longer for subsequent bankruptcies.

They may be able to help raise your credit sooner. No. Everyone will get one eventually, though, when they turn 18 and open an account that reports to the credit bureaus. (Note: these companies should notify you if they’re checking your credit as well.) Having a cell phone in your own name, for example, means that you could have a credit report even if you haven’t yet applied for a credit card or loan.

While your credit report isn’t available to members of the general public, if someone has what’s known as a permissible purpose, they can request your credit. This means they have a valid reason for wanting to see it. Typically, you’ll see this from: Lenders Collection agencies, when they’re trying to collect monies owed Insurance companies, for specific types of insurance applications Employers, but only with your permission Rental companies, utility companies, and phone companies (but again, only with your say-so) A credit score is a double-edged sword.

Your score is in your hands, and mulling over how to bump up your number can only mean good things for your finances.

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The lender told you to get a copy of your credit report as part of the pre-qualifying process for a mortgage. The purpose, he said, was to see how your credit looked and to clear up any errors that might be in the report. But now that you’ve got it, there are an awful lot of numbers, abbreviations and terms you’ve never seen before.

Order a copy of your credit report and review it for any errors.Costs vary from state to state, but in most states, it costs $9 to get your report.TransUnion,Equifax andExperian all allow you to review your report online. Clickhere for contact information on all three agencies. “Looking at one is a useless endeavor; you need to look at all three,” says Howard Dvorkin, president of Consolidated Credit Counseling Services in Fort Lauderdale, Fla.

That’s not normally the case.” The reports will have different information because it’s a voluntary system, and creditors subscribe to whichever agency they want — if any at all. Maxine Sweet, vice president of consumer affairs at Experian, stresses the importance of ordering the report directly from the credit bureau instead of asking a buddy who works at a bank to pull one for you.

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The one you get from the credit bureau is designed for consumers. “The information is the same, but it’s much more consumer friendly,” she says. Well, not quite the same. But the differences, Sweet says, are only to make the report easier for consumers to read. The report sent to a lender will list the credit bureau member numbers of your creditors and it won’t have the complete list of every company that’s pulled your credit information for promotional purposes, like pre-approved credit card offers.

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The Fair Isaac Corporation is the creator of the FICO score, the widely used credit scoring model that is used to determine a person’s credit risk. A credit report is basically divided into four sections: identifying information, credit history, public records, and inquiries. Identifying information is just that — information to identify you.

It’s not unusual, Sweet says, for there to be two or three spellings of your name or more than one Social Security number. That’s usually because someone reported the information that way. The variations will stay on your credit report; “If it’s reported wrong, we leave it because it might mess up the link.

The next section is your credit history. Sometimes, the individual accounts are called trade lines. Each account will include the name of the creditor and the account number, which may be scrambled for security purposes. You may have more than one account from a creditor. Many creditors have more than one kind of account, or if you move, they transfer your account to a new location and assign a new number.

On Experian’s report, your payment history is written in plain English — never pays late, typically pays 30 days late, etc. Other comments might include internal collection and charged off or default. “Charged off means the creditor has given up, thrown in the towel,” Ulzheimer says. “He’s made efforts to collect and written it off.” Other reports use payment codes ranging from 1 to 9; an R1 or I1 on a report is an indication of a good payment history on a revolving or installment account.

An Unbiased View of How To Read Your Credit Reports – Nerdwallet

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The public records section “is never a good story,” Sweet says. “If you have a public record on there, you’ve had a problem.” It doesn’t list arrests and criminal activities; just financial-related data, such as bankruptcies, judgments and tax liens. Those are the monsters that will trash your credit faster than anything else.

That’s a list of everyone who asked to see your credit report. “Any time anyone gets into the report, it’ll post an inquiry,” Ulzheimer says. “If you call the credit bureau and ask for a copy, it will be on there. It’s a very detailed entry record. It’s great for the consumer.” Inquiries are divided into two sections.

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“Soft” inquiries are from companies that want to send out promotional information to a pre-qualified group or current creditors who are monitoring your account. The soft inquiries are only shown on reports given to consumers, according to Sweet. You may have heard that a large number of inquiries can have a negative impact on your credit score, but you’re probably OK.

“They’re not the steak in the steak dinner.” For instance, the FICO scores have at least a 30 day buffer period where auto and mortgage inquiries are initially bypassed and not counted. It also counts two or more “hard” inquiries in the same 14-day period as just one inquiry. “You could have 30 in two weeks and it only counts as one,” Ulzheimer says.

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The process takes time because the creditors have 30 days to respond to a charge of a discrepancy. As long as a charge is in dispute, that dispute will show up on your report. Long-time lenders say it’s common for reports to have errors. Some estimate that as many as 80 percent of all credit reports have some kind of misinformation.

If you asked a random sampling of family and friends about their credit score, chances are some of them might have an idea what it is, thanks to credit score monitoring becoming increasingly popular and accessible. If they recently refinanced a loan or took on a new form of debt, they might even know the exact number.

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