Understanding a Credit Report in Detail

Credit Report

Taking control over your financial future can be best started with earning a credit report. There are several major agencies that make and issue credit bureau reports. Business experts recommend to obtain your credit report only from reputable agencies and review it at least once a year in order to know that where you stand with your creditors. Also, the same is an excellent way to keep yourself well-informed of possible errors as well as scams. Nonetheless, it is possible to have difficulty understanding your credit report once it is received.

As mentioned earlier, credit reports are the best source to know your credibility in the relevant market and industry, they may contain varying information because most creditors subscribe to these agencies on purely intended basis. Every agency’s report may present somewhat different than others but the way to enlighten the information will be pretty much the same on the whole.

In order to make sense of report, it is crucial that you know the basics of reading and comprehending this important document. A credit report mainly consists of five major parts i.e. personal information, credit history, public inquires, and relevant records. It is important to carefully check all the sections to identify any possible errors. At this point, it is best to pen down the errors that you may have discovered on a separate piece of paper while reviewing the report.

Let’s look into each section of a bureau credit report to understand this document properly.

  1. Personal Information Profile

Every credit report contains all your basic information including your full name, date of birth, previous and current addresses, social society number, and the companies that you have worked at. Some reports may show your spouse’s name wherever it is applicable. Additionally, you may find numerous variations of your name listed which basically occurs when some creditors record the information in the wrong way. Since these discrepancies usually remain there, it is, however, imperative to make sure that all of your information is correct. Remember, any incorrect information is more likely to alert a possible identity theft to you.

Public Records

Public records are actually reports that are obtained from state, local and federal courts. These reports show records of financial judgments, tax liens, and bankruptcies. Some reports may also show unpaid child support records. Public records remain important part of your credit history for up to ten years, reflecting damagingly on your overall credit score.

Credit Score

Most credit reports reveal credit score of the relevant company. The credit score signifies the calculation of your credit risk to determine how likely you would do well on a loan. This credit score is a three-digit number, ranging from 300 to 850. The higher score you get, the better it will reflect on your status as a borrower. Having a good credit score allows you to negotiate for obtaining better interest rates.

Inquiry Section

The inquiry section of a credit report unveils any parties that have a copy of your report over the last two years. In general, there are two types of inquiries i.e. soft and hard. A hard inquiry is normally initiated by you when you apply for a mortgage. A soft inquiry, on the other hand, has three forms: one initiated by the consumer, second is the one initiated by current creditors monitoring your account or credit agency inquires requested by you, and last, companies willing to provide you with promotional applications for loans. A credit report does not show soft inquiries, instead only copies are provided to business. many lenders negatively take too many inquiries on your report so it is crucial to make two or more hard inquiries as one within a time period of 14 days.

Credit History

Credit history is another important section in your credit report which gives you a detailed list of your currently active and previously closed accounts along with their balance and arrears. Usually, this list has the first name of the creditor as well as your account number for all bills. Sometimes, these account numbers are partially appeared obscured for security reasons.

The report also shows a column to help you identify the nature of the account whether it is individual, joint, authorized user, undesignated, co-signed, shared, terminated, and maker. Additionally, there will be a note of the date for account opening along with the number of months the account payment history recorded as well as the date of last transaction made.

The credit report may also include credit cards, medical bills, car loans, and real estate mortgages. It will show the limit of high/maximum credits that you can borrow, if applicable. Furthermore, a column for terms will also there to indicate the number of monthly installments that are left to pay on the account. It will contain the overall status of your accounts, showing the remaining balance on the account and any payments that are due on the account.

There are basically two types of accounts i.e. revolving and installment. A revolving account has no certain ending date for credit card debt and so most creditors like to find some revolving debts. An installment account, on the other hand, has specific ending date and fixed payments.

The credit report normally indicates diverse types of accounts while some agencies assign these accounts with a numerical ratings system too. For instance, you can find symbols like R1, R2 or I1, I2 that will specify installment or revolving accounts. Likewise, numbers will point to the payment history of that account, such as 0 which means the account hasn’t been used so far or 1 which means dues are paid as agreed.

The credit history section of a credit report also shows the record of any debits that have been yielded to a collection agency. It shows the date when the collection was reported along with the name of the company holding the collections as well as the lender that the loan was originally lent with. Similarly, it will show the balance left on the account.

Your credit report may have several errors. If you have discovered any problems, do not delay contacting the credit reporting agencies to fix them. The credit report agency must reinvestigate the claim within a month since you have the right to dispute any inaccurate information appearing on your credit report in a timely manner.

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