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    Reading Your Credit Report

    Your credit report helps lenders determine if you're a good investment. By understanding your report's sections and terms, you'll be able to maintain a positive financial impression.
    Updated: June 2, 2016

    What You'll Learn

    • The different sections of your credit report.
    • How long public records stay on a credit report.
    • Where you can request a free copy of your credit report.
    Woman looking over man's shoulder at computer screen

    Credit reports contain a thorough history of every financial account you've ever had, which can be quite a bit of information. But your credit history is one of the keys to your financial future , so it's important to make sense of it.

    At AnnualCreditReport.com, you can get a free credit report every 12 months from to the three major consumer reporting agencies: Experian, Equifax, and TransUnion. (You will have to request information from specialty consumer reporting agencies separately.) Different creditors may send information to only one or the other (or the other), so it's a good idea to order your report from all three. Their reports will look different as well, though they'll all contain similar important information.

    Identifying Information

    The first thing to check on your report is your identifying information to ensure all the personal information and account details are correct. Don't be alarmed if there are a few different spellings of your name or a few Social Security numbers; these just mean that someone reported incorrect information before they corrected it.

    If all of that's correct, it's time to move on to your credit history.

    Credit History

    Your credit history will likely take up the most space in your report. It sums up all the accounts you have, like mortgages, credit cards, car loans, etc. For each account, you can see whether or not the account is still open, what the current balance is, and if you've been late with any of your payments. There are a lot of details to check, but it's especially important to take notice of anything that's negative.

    Aside from late or missed payments, check for any accounts that have been sent to collections or are marked as defaulted. If an account is sent to collections, it means the original creditor gave up on trying to get their money back and hired a collections agency to pursue the charges. If a loan has been defaulted on, it means that you haven't fulfilled your part of the loan contract. Negative notes like these need to be fixed as soon as possible, since they can hurt your credit score a lot.

    If you have a few late or missed payments, don't despair—especially for accounts where the slipup was a long time ago and you've made a lot of recent payments on time. In this case, it's worth calling the company and asking for forgiveness for those dates, if possible, since you're now in good standing. If you're planning to borrow a big loan soon, getting those bad marks removed could very well help you get a lower interest rate.

    You can also see the ratio of open credit you have versus debt you owe in this section. A $4,000 limit on a card with $2,000 in charges means you have 50% available credit for that account. You can also see the highest amount charged for each account, and which companies have checked your credit in the past few years.

    Negative Information

    As you could probably guess from its name, nothing good ever happens in this section—so hopefully it will be blank. This section lists information about things like court records, bankruptcies, overdue child support, etc. It only shows financial information—there won't be any arrests or convictions—but anything appearing here will severely lower your credit score.

    If you do have a public record, the "good" news is that it will be off your credit report in 7 to 10 years. During that time, it's very important to make payments regularly and try to close the account as quickly as possible. If you're on an aggressive schedule to pay off the public record ahead of time, you might even be able to mitigate some of the damage.

    Inquiries

    There are soft and hard inquiries. Soft inquiries are when companies look into your credit for promotions and such. Hard inquiries are when companies look into your credit for things like credit applications and loans. Hard inquiries can slightly affect your credit rating if there are a lot of them, but generally FICO® credit scores pretty much ignore this section.

    Putting It All Together

    This information makes up the majority of your credit report. You won't find details about things like your race or salary (these won't affect your credit score, either). As you review your report, keep in mind the following:

    • Report any discrepancies you find to the appropriate consumer reporting agency.
    • If you're about to take out a big loan and you only have a few late payments on your credit report, see if those companies will forgive them as a courtesy.
    • Try to avoid getting any negative marks, and don't worry too much about any inquiries.
    • Remember that you can request a free credit report every 12 months from Equifax, TransUnion, and Experian at AnnualCreditReport.com, so try to make that an annual habit.
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