How to Analyze Your Credit Report
You can analyze your credit by simply looking it over. It is very important to know what everything is and what everything means. You are reviewing your credit report to ensure that everything on it is accurate.
If you happen to find any inaccuracies you will have to enter into a credit dispute in order to get the inaccuracies resolved or removed.
We offer a DIY Total Credit Repair Course. You will be able to apply everything you will learn in this article to repair your own credit report.
Doing so will save you 100s if not 1000s of dollars. You will also have knowledge that most Americans do not care to have.
After you learn how to analyze your credit report will you take action? Will you fix your own credit? We hope so!
We are here for you and will support you throughout the entire process. Let’s get into the reason why you are here.
You are here to learn How to Analyze Your Credit Report. We’ll start with the basics and progress to the vital info that you came for.
What is a Credit Report?
Can you imagine that when you buy something in the store without checking how much you have in your wallet and you go straight to the cashier?
Unfortunately, when you are about to pay the item, you are in a total shocked because of the price. Just like in a credit report, how can you know if there are any errors or mistakes in your report if you are not going to check it? What if some errors and mistakes affect your credit score?
Credit report refers to an individual report of someone’s credit history prepared by a credit bureau. The credit bureaus collect information and create a credit report based on that accumulated information, and lenders use the reports together with other details to know the loan applicant’s creditworthiness.
When I say creditworthiness, it means that it is a valuation performed by lenders that determines the possibility a borrower may default on his debt obligations.
Repayment history and credit score are the main factors that it considers. Your creditworthiness is based on how you have handled your credit and debt obligations up to this present time.
The creditors can tell how well you have managed your past credit obligations by looking at your credit report, which is a record of the activities on your credit accounts.
Credit reports can be count as dozens, or sometimes even hundreds, of long and very time, consuming for a person to study, analyze and review.
Instead of reviewing your whole and complete credit report to determine your creditworthiness, lenders, and creditors can use your credit scores, which are objective measures of your creditworthiness based on your credit report information.
How to Analyze Your Credit Report continued.
A credit score was often ranging between 300 and 850, which is a three-digit number. The higher your credit score is, the more creditworthy you are.
That means that you are more likely to pay back your debt obligations in time or you make payments on time, the more that the creditors and lenders are willing to approve your application and give you a lower interest rate.
Making payments on time is a big factor that affects your creditworthiness. So, to have a good credit score you will need good feedback on your credit profile. it is wise to pay your debt obligations on time.
Your credit report also includes the information including where do you live, bureau or pay your bills, where do you work, whether you have filed bankruptcy or had a lawsuit judgment and whether you had a home foreclosed or a vehicle repossessed.
An actual credit report may be over 100 pages long. Credit reports are maintained by businesses that are known to be credit bureaus or credit reporting agencies.
These credit bureaus are Equifax, Experian, and Trans Union – the three major credit bureaus in the United States.
Companies that you do business with have agreed to send your debt information to the credit bureaus – at least one of them or maybe all the three who then update that information in your credit report.
Most of your credit card and loan accounts are updated on your credit report monthly. Some businesses do not update your credit report with your monthly payments but will advise the credit bureaus when you become seriously delinquent on your payments.
For instance, your cable bill is not automatically included in your credit report, but if you still over six months on your payments, the account balance might be listed on your credit report as a debt collection.
Your credit report contains detailed information about your credit cards and loans. For credit cards, your balance, credit limit, account type, account status, and payment history are all included on your credit report.
Loan balances, original loan amount, and payment history appear on your credit report. Public records like bankruptcy, foreclosure, repossessions, and tax liens are listed in a separate section of your credit reports.
Credit reports include a list of businesses that have recently checked your credit history either as a result of an application, you made or a promotional screening.
These credit checks are known as inquiries. Your version of your credit report will show inquiries from everyone who’s pulled your credit report, including businesses who look at your report for promotional purposes.
A lender’s version of your credit report only shows the inquiries that were made when you put in some application. You can, and you should always check your credit report.
You should order your credit report once a year to make sure that the information listed is true and correct. If you suspect you have been a victim of identity theft, you should check and monitor your credit report more frequently.
If you want to order your credit report, the following are the ways on how to order it:
(1) through a website, the government set up for that purpose for free,
(2) via promotional offer for free, and
(3) by purchasing from one of the credit bureaus.
Why is Credit Report Important?
Different kinds of businesses check your credit report to make decisions about you.
Bank companies check first your credit report before approving your credit card and loan applications – including mortgage or an auto loan. Landlords review your credit report to decide if he or she will allow you to rent on his or her apartment.
Your credit report affects many parts of your life, so it is essential that the information listed on your credit report is positive and accurate.
Your credit report is the primary source of information for your credit score – which a number that lenders use instead of or in addition to your credit report.
High credit scores show that you have definite information on your credit report while low credit scores show negative information.
Having positive information on your credit report plays a valuable role in your financial issues in life.
Not only is it essential for obvious things like getting a credit card or qualifying for a loan but also for less obvious things like renting a car, getting a cellular telephone service and perhaps even getting a job.
One thing that can happen to you by any chance is that you could be denied a line of credit. A low credit score shoes to lenders that you are a high-risk borrower and there is a high possibility that they will not be able to lend you money – even if you need it the most.
So, be careful about the decisions you make because it will always have an effect on your credit score and will be included in your credit report.
The Three Major Credit Bureaus
There are three major credit bureaus in the United States which are Experian, Equifax, and Trans Union. Their job is to compete to capture, update and store credit histories on most United States consumers.
While most of the information collected on consumers by the credit bureaus are similar, there are some differences.
For instance, the one credit bureau may have unique information captured on a consumer that is not obtained by other credit bureaus or the similar element may be stored or displayed differently by the credit bureaus.
All of the three major credit bureaus are publicly-traded, for-profit companies – they are not owned by the government.
However, the government has legislation called the Fair Credit Reporting Act that regulates how these and other credit bureaus can and must operate well.
How to Analyze Your Credit Report explained.
Credit bureaus collect and hold consumer credit information then sell it to businesses who have a legally valid reason for reviewing it.
For instance, a company with whom you have applied for credit with would have a valid need to look at your credit history. Your information can also be sold to other companies that want to prescreen you for their products and services.
It can only provide information and analytical tools to help businesses make decisions whether to offer you credit and what some sort of interest rate they should charge you.
The bureaus themselves do not make such decisions, but the lenders do.
These three major credit bureaus are often grouped. But they are separate companies that compete for the business of creditors, who may use both the credit reports and scores from these bureaus to help them in making such lending decision.
The data that the bureaus collect come from a variety of sources:
1. Information reported to the bureaus by creditors. Creditors, such as banks and credit card issuers, may report information about their accounts and customers to the credit bureaus. In this context, the creditors are known as “data furnishers.”
2. Information that’s collected or bought by the bureaus can be sold. For some types of information, the credit bureaus purchase the data. For example, a consumer credit bureau might buy public records information from LexisNexis, another credit bureau, and use this information when generating your credit report. Examples of information that a credit bureau may buy include government tax liens or bankruptcy records.
3. Information that gets shared among the bureaus. Although they are competitors, sometimes the credit bureaus must share information. For example: When you place an initial fraud alert with one of the bureaus, it’s required to forward the signal to the other two.
If you look closely at your credit reports, you may notice some differences. One reason for this could be because creditors aren’t required to report information to the credit bureaus. Some may choose to report your account to only one or two of the bureaus or not to report it at all.
Your credit scores could also be significantly different depending on which report your score is based.
This may be because of the potential differences in the data that make up each report.
Discrepancies in Late Payments
A late payment – at least thirty days past due could drop your score as big as 100 points. Just because your wallet got hit with a late payment fee for an overlooked bill does not mean your credit report got hit with a negative mark.
Hypothetically, you can acquire a late fee for being even thirty minutes late with a payment. A lot of creditors automatically requires a fee when your due date passes without having a payment posted on your account.
But if you never have or barely been late before, your chances of having a credit card issuer to reverse a late fee are pretty good. There’s no more significant single factor affecting your credit score than on-time payments, so a late payment is going to sting.
It stays on your credit report for seven years after the account was initially reported late. A late payment’s impact fades with time. If you have otherwise spotless credit and a good score, though, a late payment can knock as much as a hundred points off your credit score.
If your score is already low, and you have consecutive late payments, it won’t hurt it as much. You can’t change the past — but if your credit behavior from here on out shows that you pay on time, every time, that will be reflected in your score.
Banks and issuers consider payment history when assessing your credit risk and deciding whether or not to approve you for credit.
A long-standing history of on-time payments suggests that you are a responsible and reliable borrower; an unfortunate history of on-time payments indicates that you may not be able to pay off debts and could result in a costly loss to the bank or issuer.
Being unreliable with payments is a red flag to financial institutions, and several things can occur when you pay late.
(A) You will usually be charged a late fee.
(B) Your interest rate may rise or increase.
(C) It may end up in your credit report.
(D) It might decrease your credit score.
Paying late is a dangerous credit habit that could lead to more damaging credit actions, such as omitting an account until it becomes delinquent or sent collections. A statement in the collections area, may remain in your credit report for seven long years and may cause even more damage than a late payment.
Reviewing each item in your credit report
You are entitled to a free credit report every twelve months from all the three major credit bureaus such as Experian, Equifax, and Trans Union.
It is important to review your credit profile individually and carefully. But your credit report contains a lot of information, and it can be confusing to navigate, examine and study. Here’s how to decode and understand your report.
For some reasons, experts recommend checking your credit report once a year. Because your credit is a collection of your debt history, it can affect your loan interest rates and ability to open financial accounts.
An annual review helps ensure your report is up-to-date and accurate. Also, if you’re a victim of identity theft, your report might contain errors. To sum up, reviewing your credit keeps you aware of your financial situation.
How to Analyze Your Credit Report broken down.
You might see numerous sections on your credit report, but most of the information is grouped into four main categories:
(1) Personal Information
(2) Public Record Information
(3) Creditor Information and
(4) Credit Inquiries
The personal information is a self-explanatory matter, but this section generally includes your name, social security number, date of birth, employment data, current address, and previous address.
If you have open any legal issues related to your financial status, then they will be included in this section. These records might be bankruptcies, liens, judgment and wage garnishments.
The meat of your report and the eye of it is known to be as Creditor Information. All of your existing lines of credit are included and noted in this section. If you have had any credit turned in to a collection agency, mainly that would be covered too.
Aside from some necessary information, each account also tells you
(1) The status of your mind – whether it is current, open, closed or charged off.
(2) The responsibility of the account – individual or joint
(3) Your account balance
(4) Your most recent payment
(4) Past due information
(5) Your credit limit
Credit inquiries section includes businesses or individuals who have pulled or reviewed your credit report. It might consist of a bank company at which you opened an account, a mortgage lender if you are applying for a home loan.
There are two types of inquiries – hard inquiries and soft inquiries. Hard inquiries are made by lenders when you have applied for a loan or line of credit. If you made too many inquiries like this within a particular time frame, it could count against your credit score.
Soft inquiries are inquiries made when you check out or view your credit report or when a marketing agency pre-approves you for a line of credit.
Banking site offers a handy breakdown of the credit report codes. Here are some of the codes you will encounter and what they usually mean:
• CURR ACCT – this means that account is current, in good standing.
• CURR WAS 30-2 – this implies that account is present, but was thirty days late twice.
• PAID – this means that account balance is paid off and is inactive.
• CHARGEOFF – this implies that unpaid balance charged off, the credit grantor no longer seeks balance and likely has been sent to collections.
• COLLECT – this means that account is seriously past due and has been sent to collection.
• FORECLOS – this means that the property was foreclosed.
• BKLIQREQ – this means that debt was forgiven via chapter 7, 11 or 13.
• DELINQ 60 – this means that the account is sixty days past due.
How to Analyze Your Credit Report in great detail.
If you think that your report contains an error, you can file a dispute. All three of the major credit reporting agencies allow you to submit disputes online. You can also mail in your dispute.
The Federal Trade Commission offers sample dispute letters. According to Bankrate, TransUnion and Equifax offer a mail-in dispute form, and Experian offers this on the last page of the consumer’s Experian credit report.
If it’s your first time reading a report, or if your report includes a lot of activity—especially adverse activity—a credit report can be confusing. Don’t let that deter you from keeping up with your credit. Once you learn how to read it, it’s pretty simple.
Reviewing your credit report is an essential part of understanding your credit health. Always remember that learning your credit scores should not be the end of your credit evaluation.
Knowing how to read your credit report can help you learn how you can improve your credit. Given the fact that it is essential to understand your credit report, you also keep an eye if there are any identity theft happens or fraud.
Fraud accounts are intentionally manipulation of financial statements to create a good appearance of a company’s health. It usually involves employees, account or an organization itself to mislead the shareholders and investors.
Scams affect every part of your life. This kind of people tries to kick you out of your personal information and your money. The most common types of frauds are banking, bankruptcy, health, housing and mortgage, immigration, internet, mas marketing, passport and visa, postal mails, telemarketing, and telephone.
Bank account fraud has occurred if transactions you have not made are shown in your bank statement.
Protect yourself against identity fraud and do remember the following:
• Don’t throw out anything with your name, address or financial details without shredding it first.
• If you receive an unsolicited email or phone call from what appears to be your bank or building society asking for your security details, never reveal your full password, login details or account numbers. Most banks will not approach their customers in this manner.
• If you are concerned about the source of a call, ask the caller to give you the main switchboard number for you to be routed back to them. Alternatively, hang up and call your bank again on the legitimate phone number printed on your bank statements.
• Check your accounts carefully and report anything suspicious to the financial institution concerned.
• If you’re expecting a bank or credit card statement and it doesn’t arrive, tell your bank or credit card company.
• Don’t leave things like bills lying around for others to view.
• If you move house, always get Royal Mail to redirect your post.
• Get regular copies of your credit report from a credit reference agency.
Notify your bank immediately if you see any unusual activity on your account. With numerous such kinds of fraud and scams, it is difficult to figure out where to report each type.
First, you file a report with your local police department. You might also consider reporting to your consumer state protection office.
You can also report specific kinds of fraud and scams to federal enforcement agencies but they usually cannot act on your behalf, but they can use complaints to record the pattern of abuse.
Everything helps the bureaus take action against a particular company or industry. Keep in mind that reporting fraud may not recover everything that you have lost, but it does improve the chance and possibility of getting some of it back and avoid future losses.
It can also help law enforcement authorities to stop scams before other people become victims.
I hope that this article gives you an idea and enough knowledge about why you should check and analyze your credit report. Once you already know to examine your credit report, it would be easy for you to determine errors and mistake if there is one.
Analyzing the credit report is not easy, and it is time-consuming, but you have to be patient and insert some effort because that is a big part of your life as an individual.
Your credit score also lies within it. That is why you need to understand every detail that is included in it.
Just like your credit score, it is also important because all the things you have gone through and all the decisions that you have made are all listed on that report.
To sum up, all of this, be very vigilant in your actions and decisions if you do not want to have a negative mark on your credit report most especially the late payments.
Usually, the late payment is the most common report that is seen in every credit report, and it often remains up to seven long years. You will have a hard time for seven years, and you do not want that to happen, right?
So, know all the things you need to know and understand all the things you need to know what to look for, for you to be aware of items that are on your credit report.
Once you have a negative mark on your credit report, it will affect your credit score, and you need to rebuild it. So be extra careful about everything that is related to your credit score.
There are so many inaccuracies on your credit report that you may not know about. We have listed 30. There can be any combination of these blatant errors on your credit report. It is your job to find and dispute these errors. You will want to check all of the following:
- credit limit
- high balance
- frequency of payments
- account number
- information not the same on all three bureaus
- monthly payments on closed accounts
- the late payment on accounts in collection
- late payments AFTER account close-date
- account re-aging
- different account open dates across the bureaus
- obvious information that is missing
- date of last activity
- payment amount
- monthly payment
- date closed
- date of first delinquency
- charge off amount
- type of account
- sold to/transferred account
- payment status
- payment status details
- creditor name
- filing date
- court name
- late payments
- notice of dispute
This concludes How to Analyze Your Credit Report. Did we miss anything? Did we answer every question you may have? If so tell us about it. If not, comment.