It’s important to make sure that your personal information is accurate on your credit report.  The most important piece of information that needs to be accurate is your Social Security number.  If the social security number on your credit report isn’t yours, you will want to look into this.

If you’re a senior or a junior, or have the same name as a relative, you will want to make sure that their credit information is not being reported on your report.

You should also check your address and address history, if it shows up.  If there are addresses on there where you have never lived, you should look into that in greater detail.
 

Section two, your payment history

Typically, you are going to find your credit score at the top of this section.  If you have a single bureau report, this may not be the case.  If you have a tri-merge report, meaning you have all three bureaus reporting information on one report, you will see three scores, one for each bureau.  In the home loan world, we throw away the highest and lowest scores, and use the remaining middle score.  So if you have 647, 668 and 620 as your three scores, I am going to use the 647 score for a mortgage qualification.

Often times you will also see a list of the top 3 or 4 factors that had an impact on your credit score in this section.  This can give you a general idea of where you may be able to improve.  For example, if the proportion of balances to credit limits is too high, you can read my “managing revolving credit card debt” post and improve on that aspect.

Below the credit scores, you are going to find the meat of your report.  This is a listing of all your trade lines.  Your mortgage history, credit card history, student loan history, collection accounts, etc. will be found here.  Depending on your report, they may be in various orders.  The reports I pull list them from most recent at the top to oldest at the bottom.  Some break them down into sections of derogatory, never late, closed, etc.  Either way, take a look at your report and see how they are listed so you know what you are looking at.

Each line item is going to have some basic information.  You will have the creditors name, when the account was opened, when the last activity on the account was, if it was closed and when, the high credit limit of the account, the current balance, current payment amount, amount behind currently, the type of account it is and then a 2 year payment history of the account.  These should all be intuitively labeled at the top of the corresponding column, if you know what you are looking for, you will be able to find it.  The one item you may need some direction on finding is the payment history.

Typically, this is the last item for each creditor, in the row at the far right.  You will have a 2 year history represented by individual months.  Each month you have paid on time will typically be represented by a 1.  As you pay late, that one increases.  A 2 would indicate you were 30 days late.  A 3 is 60 days, 4 is 90, 5 is 120 or more.  You can go back and see the most recent 24 month history, reading left to right, top to bottom.  So if the first number on the top column is a 2, you are currently 30 days late on that debt.  Other numbers you may see in this section include an 8 for repossession, a 9 for a charge off or a blank, sometimes an x, for no data available for that month.

There can be a lot of information in this section of your credit report.  If you have a credit report and would like help looking it over, feel free to contact me.  I don’t mind taking a look at your report and answering a couple questions.  I will go back into more detail on this section of your credit report in a future post.

Section three, public records

This section is going to list any public records you have.  You will find any bankruptcies, tax liens and other types of liens in this section.  It will give information on who the lien is to (federal tax lien, state tax lien, lien put on by so and so court) or what kind of bankruptcy was filed (7, 11 or 13).  It will give you the date it was filed, and if it was closed, the date it was closed.  In the case of a bankruptcy that was dismissed, it will show the file date, and the dismissal date.  A lot of people don’t realize this, but if you file a bankruptcy, then have it dismissed, even the next week, it is still going to impact your credit in a major way.  Just because you have it dismissed does not mean it comes off your credit report.  In this section you will also see how much is owed on these liens, etc.

Section four, inquiries

The Inquiries section shows you who has pulled your credit report recently.  There is a lot of misconception about how this impacts your overall score.  If you have a lot of credit pulls, it is going to drag your credit a bit, but in general, I don’t typically tell people to worry about this too much.  If you are shopping for a home loan, your credit is going to get pulled a couple times throughout the process.  If you are shopping for a mortgage, you may want to have one tri-merge report pulled, and use that to shop with so you don’t need to have your report pulled a number of times.  It is very important to have a recent tri-merge report if you want to be quoted accurate numbers.

Well, that’s how to read your credit report in a nutshell.  This is an important topic, I will continue to revisit it, along with tips to help improve your credit.  Please check out my post on managing your revolving debt to improve your credit score.  As always, feel free to leave any questions you have, I’m happy to answer them anytime.