How to Read Your Free Credit Report
Have you ever seen your own credit report? Do you know what information it shows? How about what information it does notshow? Do you know the names of the credit bureaus? Do you know why the information on your credit report is so important? In today’s credit-based society, understanding your credit score, how it’s calculated, and what you can do to change or improve your score, is incredibly important.
There are three major credit reporting bureaus, Equifax, Experian, and TransUnion. These credit agencies collect and maintain information on your credit history. Banks, mortgage lenders, retail stores, employers, apartment owners and many others who provide services to you, buy your credit information in the form of a report on your credit history. They do this as part of the decision process when making you a loan, hiring you, selling you a product on credit or processing a lease for your new apartment. Clearly it is important that the information contained in your credit file be accurate, so you need to occasionally monitor your report by reviewing the contents on a regular basis. You can obtain a copy from each agency or bureau annually at no cost.
Before telling you what is in your credit file and credit report, It’s important you know what it does not contain. There will be no information on your checking or savings accounts. There will be no information regarding your gender, ethnicity, religion, political affiliation, medical history or criminal record. It won’t contain information on bad debts placed for collection more than seven years ago or information on a bankruptcy more than ten years ago. That doesn’t mean this information can’t be obtained by other sources, it just won’t be in your credit report.
Here is what your credit report will contain, and when you receive your report, you should look for these things and check to be sure the information is correct. First, it will contain most of your personal information. This information will include your name and/or any variation the credit bureaus believe you may have used in the past.
Your current and previous addresses are included, along with your Social Security number, date of birth, and current and previous employers. Check all of this information and notify the agency if you believe any of it is incorrect.
Other information ithat will be included (this actually makes up most of the report) is information reported by your creditors. It will include details of each of your credit accounts. The area under each account will have information such as the date the account was opened, your credit limit or amount of the loan, the payment terms and the balance, and a history of whether you pay on time or not. It will indicate Closed and Inactive accounts that may stay on your report for up to seven years. When you review this area of your report pay special attention to the details and report any inaccuracy to the credit agency.
Next, there will be details on credit inquiries. Each time a company orders your report the agency will record that information and who it was that inquired. Many public records also end up on your report, such as judgments in courts of law, recorded liens, bankruptcies and even overdue child support. Most of that information stays on your report for about seven years.
The credit agencies also rate an individual’s credit worthiness by applying a mathematical formula to the information in your file, it’s called a credit score or FICO score. It isn’t provided with your annual free report but can be obtained from the credit bureaus for a fee. The average score today is 693, so anything above that is considered good credit.
If you’re pleased with your credit score and didn’t find any errors on your credit report, you’re finished. File your report away, and be sure to check if (for free) once a year. It’s important to do this, errors will show up on everyone’s credit report eventually.
If you’re not happy with your credit score, or if you found errors and inaccurate information, then you need to take the time to dispute these items with the credit bureaus. It’s a process of writing some dispute letters, then following up to make sure the changes have been made. Once you’re done, file everything away, and be sure to check your information at least once every year.
Credit repair sounds scary, but it’s not, the hardest part is getting started. With a little bit of information, some examples of letters, and a plan, you can repair your own credit for free. Take the information at http://www.creditscoremaximizer.com and use it to repair your own credit — I did, and so can you.
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