Understanding Your Credit Report
Your credit standing and history is important because having good credit can help you achieve important financial milestones and goals. One of the things that go into maintaining a healthy credit profile is regular monitoring of your credit report and score, which gives you the capability to correct errors where needed or make necessary modifications to achieve improvement.
Understanding your credit report is essential to maintaining good credit standing, and because there are a lot of components that make up this report, it can be difficult to understand at first glance. To help here is an essential breakdown of your credit reports key components.
Personal Identity Information
Your credit report is a very personal piece of your financial portfolio, and because of this, you’ll find all of your (sometimes private) identifying information on it. This information will include:
- Full name and any aliases
- Your date of birth
- Current and previous addresses
- Your social security number
- Any contact information for you, such as phone numbers
- Employer History
All Open and Closed Accounts
Any credit accounts you’ve ever owned will be on your report. Regularly checking the accounts listed on your credit report is important as this is the area that can most affect your credit score and impact the decision making of any future loans and creditors you apply with. In the accounts section of your report, you’ll find the following information:
- Open Accounts and Dates
- Defaulted Accounts and Dates
- Closed Accounts and Dates
- Account Collection Status (if applicable)
- Account Balances
- Status of Your Account
- Payment History
- Credit Line and Utilization Information
It’s important that you take steps to correct any errors or derogatory marks in this section as quickly as possible in order to maintain or improve your credit score. Keeping a close eye on accounts can also be a quick identifier of identity theft.
Public Records
When you experience a bankruptcy, have a tax lien initiated, incur a home foreclosure, or have a civil judgment made against you, it will be listed in this section. Unfortunately, this section is pretty much all bad and can cause your credit score to lower substantially; however, with time and responsible credit usage and report maintenance, public records will eventually be removed or exceed their time limitations and no longer affect your credit standing.
Consumer Statement Reports
If you have ever filed a credit-related complaint or disputed anything that you have found on your credit report, it will be listed here. Some examples of information you can find in this section are:
- Reported identity theft
- Incorrect account standing information
- Personal identifying information corrections or disputes
- Public record disputes
Even if the dispute isn’t resolved in your favor, this can be an important section as it shows your attempt to resolve a problem and that you are taking action and seeking resolutions. Seeing this can help a creditor in their decision making process.
Credit Inquiries
Any time a company or creditor pulls your credit score and report for reference in their decision making, it will be documented here. Within reason, hard inquiries such as car financing and home mortgage shopping won’t hurt your score too much, as long as they are done within a short period of time and you don’t have your information pulled by too many companies. If your credit is pulled too often, however, this will reflect poorly on your credit report and has the potential to significantly reduce your credit score.
Your credit inquiry section can also be an important indicator of potential fraud or identity theft. If someone is trying to apply for a loan or account using your information, it will be presented here; keeping a close eye on this section can potentially help you stop fraud before it starts or gets out of hand.