Understanding Your Credit Report and How to Properly Read It
With so many apps available to download where you can easily view your credit scores and some basic information about your accounts, you may not have been able to view your full credit report. It may seem relatively complex if you have been able to view your report, but it is pretty simple. Let’s see how you can obtain a copy of your credit report and, more importantly, how to read and understand what you see.
What is a Credit Report?
A credit report is a document that showcases an individual’s credit accounts, the payment history associated with each account, and any information about your credit activity and current credit situation. All the information on your credit report is used to calculate a credit score. Most people today have more than one credit report. Credit reporting companies (Credit Bureaus) are in charge of collecting and storing financial data about you submitted to them by creditors, banks, lending institutions, and other financial companies.
This information is stored on a report in order for lenders to view your financial history before providing or extending a line of credit to you. Credit reports are used for various reasons, including obtaining large lines of credit like mortgages or car loans, credit cards, and as of recent, employment.
What is On a Credit Report?
Credit reports will have an extensive amount of information about you and your financial history. It also will show personal information, credit accounts, inquiries and more. Most credit reports will contain the following information:
Personal Information
- Name (First, Last, and even Nicknames)
- Current and Previous Addresses
- Birth Day
- Social Security
- Phone Numbers
- Employment Information
Credit Accounts
- Current and Historical Credit Accounts
- Credit Limits
- Account Balance
- Account Payment History
- Account Open & Close Dates
- Name of Creditor
Derogatory Accounts
- Collections
- Medical Bills
- Repossessions
Public Records
- Liens
- Foreclosures
- Bankruptcies
- Judgments
A credit report may even show information on overdue child support provided by a local, state, or federal agency or child support agency.
Inquiries
- Companys that have Accessed your Credit Report
Creditor Information
- Company Name
- Company Phone Number
- Company Mailing Address
Not every credit report will have all of the information listed above. However, this is the most common information displayed on most credit reports. Now that you have a bit of an understanding of what goes into a credit report, let’s explore where to get a copy of your credit report.
Where to Get a Copy of My Credit Report
There are plenty of sources available on the internet where you can obtain a copy of your credit report. We recommend enrolling in a credit monitoring service like Smart Credit that will display all three of your credit scores and provide you with all three credit reports from the nationwide major bureaus. This is the simplest way to view your extensive report and familiarize yourself with what is currently being reflected on your credit report.
You can also request a copy of your credit report from the major bureaus, Equifax, Experian, and TransUnion. The instruction on obtaining a copy with each bureau is linked to the bureau name, and we do recommend clicking the link and reading more.
You can also request a free credit report from Annual Credit Report. Through Annual Credit Report, you can request all three reports at once, or you can order one report at a time. If you only order one credit report, you can always request additional reports. However, that will come with a fee of no more than $13.50.
Another way you can obtain a copy of your credit report is if you were denied a line of credit, insurance, or employment due to your credit report. You have the right to request a free copy of your credit report from the credit reporting company identified. You must request this copy of the credit report within 60 days after receiving the denial notice.
The best and most hassle-free way to view your reports on a monthly basis is to enroll in a credit monitoring service. You can always view your reports on Smart Credit on the website, on their app, and even download PDFs to print and view on paper.
Reading your Credit Report
Now that you have a copy of your credit report, you will now be able to begin reviewing the information on your credit report. Did you know that over 70% of consumer credit reports contain inaccuracies? Under the Fair Credit Reporting Act (FCRA), any information on a consumer credit report needs to be 100% accurate and verifiable. So as you begin reviewing your credit report, take note of any incorrect information that you see being displayed.
The structure of most credit reports is as follows:
- Personal Information
- Credit Summary
- Revolving Lines of Credit
- Installment Lines of Credit
- Derogatory Accounts
- Public Records
- Credit Inquiries
- Creditor Information
Your personal information will be shown first, which is the most common area where incorrect information will begin displaying. Whether your date of birth is wrong, your name is misspelled, or it looks like you live at an address you’ve never seen, you need to take note of that information as it can result in immediate denials when applying for credit.
Followed by your personal information, your credit summary will be visible. This credit summary includes your credit scores from the day of the report, your total accounts, types of accounts, total debt, open accounts, closed accounts, and more. This information is essentially a snapshot of what your current credit report looks like.
Revolving lines of credit usually appear as the first accounts being displayed on your more detailed part of the report. Revolving credit is essentially credit cards. Your credit card accounts and information will be the first visible items on your report. Keeping these accounts in good standing is important due to revolving credit making up most of your credit score. This section will show both opened and closed accounts, delinquent accounts, and even accounts that were marked as derogatory.
Installment lines of credit will be shown following your credit accounts. Installment credit is any loans that you have opened under your name. These can be student loans, mortgages, car loans, personal loans, and business loans. The name installment credit comes from how this line of credit is paid back in fixed monthly installments. This will also show any open or closed accounts and any marks left by the creditors.
Derogatory items such as collections will be highlighted in the subsequent area underneath your installment accounts. Although there are various derogatory accounts, the collection accounts are usually visible towards the bottom of the report and, in some instances, can display charge-offs, repossessions, and even medical bills.
The last sections on your credit report will be public records, credit inquiries, and creditor information. Public records will show if you have filed for bankruptcy, have a judgment against you, wage garnishment, or any other legal lawsuit. Public records are the most detrimental items to have reflecting on your report. Inquires usually have their own dedicated section and are used to show the companies who have inquired about your credit report with the subsequent date, as well as the bureau which they went through in order to access your report. The creditor information section is used to display the address, name of the creditor, and phone number to contact the creditor. This is useful for both disputing information are reaching out to a creditor to obtain the correct information.
Reading an Account
Now that you understand the structure of your entire credit report let’s understand how to read the account information being appropriately displayed. The best way to view the account the same it is shown in the image below is through Smart Credit.
The format of how credit accounts are displayed is as follows:
- Top: Creditor Name
- Account #: Your credit account number
- Account Type: The type of line of credit, revolving or installment
- Account Type-Detail: The specific type of account (secured, unsecured, charge account, mortgage, car note, etc.)
- Bureau Code: The code used to determine the account holder (individual, authorized user, joint, etc.)
- Account Status: The current status of the account (open, closed, delinquent, derogatory, etc.)
- Monthly Payment: Your current monthly payment towards this account
- Date Opened: The day the account was officially opened
- Balance: The current balance remaining on this account is to be paid
- No of Months (Terms): The loan term length left on the account (credit cards will show 0; you can keep a credit card open for as long as you like)
- High Credit: The highest balance owed to this line of credit
- Credit Limit: The current credit limit of this account (loans will not have a credit limit)
- Past Due: Dollar value of the amount owed that is past due to the creditor
- Payment Status: The current status of payments towards the creditor (current, on-time, late, collection/charge-off, etc.)
- Last Reported: Last report date from the creditor to the bureaus
- Comments: Any remarks left by either the creditor or the bureaus
- Date Last Active: The last reported date of activity on the account
- Date of Last Payment: The last reported payment to the creditor
- Payment History: Usually shown as 2 years of history, showing green for on-time payments, yellow, orange, and red for late/missed payments, and black for derogatory status.
Now that you have a better understanding of how to read an account, you should be able to determine your current credit situation and which accounts that are needed to be addressed. If you find yourself dealing with negatively impacting items, there are a few solutions.
What to Do if Accounts are Showing Negative
After analyzing your credit report, you should be able to determine which accounts are currently in good standing and which accounts are currently in bad standing. If you see that you have accounts that are reflecting negatively on the report, you have a few options on how to proceed to handle the resolution of the account.
The most impactful option is to dispute the negatively impacting items you see on your report. There are plenty of resources available on the internet on how to send out effective disputes, and if you wish to proceed to go down the route of disputing on your won, we encourage you do a lot of research. It is a process, it will take time, and the results will come directly from the dispute methods and the consistency of sending out disputes and providing responses in a timely manner every month.
Disputing yourself is difficult and will require countless hours of research, capital to send out the letters and view your reports every month, and also a lengthy period of time before results become visible. We recommend hiring a reputable credit repair company to do so for you. Credit Supreme disputes every negatively impacting item on our client’s credit reports within the first 24 hours of their enrollment to expedite the credit repair process. Our clients also receive a 1-on-1 coach included with our service to teach you everything from reading credit reports, the credit system in general, and also the best steps they should be taking in order to receive the results they are looking for. Not to mention that each client is backed by a 90-day money-back guarantee.
Conclusion
The topic of credit is confusing, annoying, and at times very stressful. But understanding how to ready your credit report is a major first step in beginning to truly understand what is being reported by the creditors to the bureaus. This is important so you can begin to catch any inaccuracies as well as make sure that your credit report is reflecting the correct information. Any incorrect information can be disputed, and if you don’t have the time to research, learn and test, definitely look into hiring a professional credit repair company to step in and assist.