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Years ago, reading and understanding your credit report was very difficult. Today, the three major credit reporting agencies have changed the way they report your information, making it much easy to read and comprehend. Still, many people have a hard time understanding their credit reports. Below are some guidelines and tips that will help you easily interpret your credit report.

What your credit report consists of:
  -- Your identifying information - name, Social Security number, date of birth, address, previous address, and employer. This is known as the "Credit Header".
  -- Your payment history - mortgages, auto loans, unsecured loans, credit cards, store credit cards, account in collections and public records like court judgments and bankruptcies.
  -- Inquiries of your credit report - Shows who accessed your report and what the reason for pulling your credit report was. For example, if you apply for a loan or credit card.

Differences in reporting
Each of the three major credit reporting agencies use a different layout for reporting information. For example, Trans Union lists your SSN, date of birth, and phone number in the upper right-hand corner. They also exhibit the date from the time your information has been present on your file. The upper left side lists your name, address, previous addresses, employment information and the date the information was reported. Your negative credit information is the first data to be listed on your credit report.

Experian lists a small summary of items that are considered 'potentially negative'. This will include any accounts you have with creditors and/or items listed in public records. Your accounts that reflect a positive credit history will be listed next. Your identifying information is listed on the last page of the report. Public records, accounts with late payments and collections will be listed after your identifying info.

Making sure your identifying information is correct
This is very important. If the information present is not right, it can mean that someone else's data will be listed in your credit report. Errors can include having the wrong name, address, SSN, etc.. Having a Jr. listed when you are a Sr. or a name of a relative that is very similar to yours can also occur.

Understanding how your credit history is reported
First off, you need to make sure that all of the credit history information is 100% accurate.

Your credit report will typically list negative items first in the following order:
Public records
  -- Collections
  -- Charge-offs
  -- Late payments

Next, your credit report will list all of your positive accounts. Experian and Trans Union will list these accounts as 'never late', while Equifax reports them 'paid as agreed'.

This will include what companies are pulling your credit report, and for what reason. There are two types of inquiries: 'soft' and 'hard'.

'Soft' inquiries do not have an impacting effect on your score. 'Soft' inquiries include any sort of promotion, like a pre-approval, by a creditor. You can stop these offers from being presented to you by calling 1888-OPT-OUT (1888-678-688).

Your creditors will usually hold 'account reviews' of your accounts about once/year. Some credit card companies may raise your interest rates after reviewing your account. These 'account reviews' are also 'soft' inquiries.

'Hard' inquiries occur any time you apply for any sort of credit or loan.

Understanding account history status codes
A series of codes for classifying bill payment history. Below is a list and explanation of these codes.

  R1 - Always pay your bills on time.
  2 : 30-59 Days Past Due
  3 : 60-89 Days Past Due
  4 : 90-119 Days Past Due
  5 : Over 120 Days Past Due
  7 : Included in Wage Earner Plan
  8 : Repossession
  9 : Charge-off
  Blank : No data available for that month
  0 : Too new to rate, or unrated
  1 : On time

Account descriptions
Below is a breakdown of the meaning of account descriptions as listed your credit report:

  -- Company Name - Creditor
  -- Account Number - Equifax and Experian do not include the last four digits of your account. Trans Union includes the entire account number.
  -- Date Account Opened - When you first opened your account. Does not mean that you started using the account when it was opened.
  -- High Credit - The highest amount that you charged at any given time.
  -- Credit Limit - The maximum amount you are allowed to charge at one time.
  -- Terms Duration - The amount of payments that you have made.
  -- Number of Months Reviewed
  -- Date Reported - The last time your account was updated by the creditor.
  -- Balance - The total amount that you owe on your account.
  -- Past Due - Indicates a late balance.
  -- Date of Last Payment
  -- Amount of Last Payment
  -- Scheduled Payment Amount - The minimum amount you were/are supposed to pay.
  -- Activity - The most recent activity on your account.
  -- Date of Last Account Activity - When you used your account last.
  -- Date of Reported Delinquency - The first time a late payment was reported.
  -- Charge-off Amount
  -- Deferred Payment Date - Date the next payment was moved to.
  -- Balloon Payment Amount
  -- Balloon Payment Due Date
  -- Creditor Classification - What kind of company your creditor is.
  -- Date Account Closed - The date when your account was deactivated.

Your payments status will also be listed with each account. Your 'current status' will either be listed as 'pays as agreed' by Equifax and 'never late' by Experian and Trans Union. If you have been late with a payment/s, it will indicate how many days you were late.

The type of account will also be listed. Specifically, it will list your account as 'revolving' for credit cards, 'installment' for mortgages, personal loans and auto loans.

In addition, it will be listed whether your account is owned by you individually, or jointly with a spouse or another person.

In conclusion
Understanding your credit report is not too hard if you take the time to read and interpret it slowly. If you have any questions, please contact us.

More helpful articles about credit reports:
The Significance of Acquiring a Your Credit Report Regularly
Educating Yourself on How Your Score is Calculated
Fixing Inaccuracies on Your Credit Report
Improving Your Credit Report Score

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