Making Sense of the Information in Your Credit Report

If you've ever applied for a credit card or loan, you’ve
probably had your credit report reviewed by the lender. Your
credit report has a huge impact on your financial future, so
it’s well worth your time to be sure that you understand what
your credit report says about you.

Even if you’re not interested in obtaining credit, your
credit report can impact other areas of your life. Potential
employers view your credit report to assess your
trustworthiness as an employee. Landlords frequently check
the credit reports of their tenants before allowing them to
sign or renew their lease.

You can request copies of your report from the three major
credit bureaus: Equifax, Experian, and TransUnion. A recent
amendment to the federal Fair Credit Reporting Act requires
each of these national consumer reporting companies to
provide you with a yearly free copy of your credit report
upon your request.

Basically, your credit report is a summary of how you pay
your bills; repay loans; how much credit you have available;
what your monthly debts are; and other types of information
that can help a prospective lender decide if you are a good
credit risk.

Your credit report is made up of several sections. The first
section contains personal identifying information such as
your name, current and previous addresses, social security
number, telephone number, birth date, and your current and
previous employers.

Your bill paying history with banks, retail stores, finance
companies, mortgage companies, and others who have granted
you credit is one of the most important parts of your credit
report.

Public records that might indicate your credit worthiness,
such as tax liens, court judgments, and bankruptcies are also
included in the section detailing your credit history.

Your credit report includes a comprehensive listing of all
credit granters and other individuals who have received a
copy of your credit report. In addition, lists of companies
that have received your name and address in order to offer
you credit are also included in your credit report.

Most credit bureaus allow both the consumer and the creditor
to make statements if there is a dispute about something on
the report. If applicable, your credit report will include
these dispute statements.

Your credit report does not include bank account balances,
race, religion, health, criminal records, driving records, or
annual income. You've probably heard about a FICO credit
score as well. Credit scores are based on formulas that use
the information in your report, but they’re not considered
part of your credit report.

Problems with your credit report will result in you either
being denied credit or receiving a higher interest rate. Red
flags on your credit report include excessive applications
for additional credit, a short credit history, a high debt
ratio, and late payments to previous creditors.

In most cases, negative information will stay on your report
for seven years. However, bankruptcy information stays on
your credit report for ten years.

To help improve your credit report, always remember to close
unused accounts, pay your bills on time, never use all of
your available credit, and don’t apply for unnecessary
credit.