Dissecting Your Credit Report

(Looking at your credit report on a regular basis will help you to keep abreast of any issues that may be going on with your credit situation.)

If you didn’t already know, your credit information is highly important to various aspects of your life.

Not only will your credit score determine whether you qualify for a home or car loan, but it could also determine whether or not you are hired for a job.

But it is important to realize the difference between your credit report and credit score. Your credit score is a three-digit number that lenders use to determine your risk in paying back a loan; a credit report details all of the information about your credit situation, such as the number of accounts, debts, credit limits and payment history.

It is important to look at your credit report on a fairly regular basis to ensure that there are no problems.

A November 22, 2006 article by Dan Caplinger of fool.com, “Using your credit report,” discusses the ins and outs of understanding these often confusing documents.

“Getting access to your credit report is easier than ever. You've always had a right to get a credit report when a potential creditor turned you down for an account. However, the Fair and Accurate Credit Transactions Act gives everyone a right to get a free credit report from each of the three major credit reporting companies once each year. With just a little effort, you can keep apprised of your credit situation on a regular basis.”

The three major companies are Equifax, TransUnion and Experian.

Although every company is different, every credit report has the same, basic format.

When you look at your credit report, you'll see several different types of information. Your credit report includes personal information about you, including your name, date of birth, current address, and employer.”

After all of this information, you will see a summary of your credit history. This includes information on how many accounts you have opened as well as the different types of credit lines out; such as mortgages and car loans.

“After the summary, you can look at more detailed information about each of your credit accounts. Each line item includes some of the terms of your loan or borrowing arrangement with your creditor, including the name of the financial institution, the current account balance, and whether or not you are current on your payments. Each account listing will also include information about your payment history; if you have been late on payments in the past, for instance, then the report will tell you when late payments occurred and how far behind you got on your loan before bringing it current.”

At the end, you will find a list of any creditors who have looked into your credit report in the past.

Once you get the gist of the things you will encounter on your report, it is time to look for any mistakes. First off, make sure all of your personal information is correct, like the spelling of your name and addresses. If you find an actually error about information about your credit, the process can be difficult, but it is important to get any mistakes taken care of.

“Because your credit history is so important to your financial life, it's usually worth it to take the time to correct all but the most trivial of errors. Providing supporting information to the credit reporting agency, including receipts, correspondence, and other documentation, can make it easier to complete its investigation and fix mistakes more quickly.”

Finally, tie up any loose ends and be sure that there are no accounts listed on your report as open that are already closed.

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