Do you know how to read your credit report? If not, it's time to learn.
Your credit score is one of the primary items that lenders check when approving your credit request, and the information in your credit report is used to calculate your credit score. If you never check your credit report, you can't catch any errors that might be dragging down your credit score unnecessarily – or you may not understand why your score rises and falls.
A new survey by WalletHub suggests that people are intimidated by the format of credit reports. Two out of every five respondents considered credit reports hard to read. Three-quarters (76%) of respondents thought credit reports should be simpler, and 68% said they would check their credit more often if it was presented in a simpler way.
Are you confused by credit reports? MoneyTips presents a very colorful, interactive version of your credit report for easy reading. Someday, the credit bureaus may follow suit and make them easier to read – but until then, online templates can help you make sense out of all the information. Each of the three major credit bureaus, Experian, Equifax, and TransUnion all have sample reports and/or user guides to explain their format.
The typical information included in all three reports by the major credit bureaus is grouped into four main sections, as outlined below.
Personal information – Your name, address(es), birthdate, Social Security number, telephone numbers, and other personal details are noted in this section.
If you've signed up for accounts under multiple names (for example, under a nickname or with and without your middle initial), all those names and corresponding account information will be present. Make sure that all the names present are yours, and that the corresponding information is accurate.
Public Records – Financial-based legal actions against you, such as bankruptcies, are included in this section. In the past, civil judgments and tax liens were reported here, but those are no longer included in your credit report.
Account Information – Generally, account information is split into Accounts in Good Standing and Adverse Accounts (containing a negative aspect). In turn, these may be broken down further into revolving accounts (like credit cards) and installment accounts (like student and auto loans). Mortgages, another type of installment account, may have a separate listing.
In this section, you should check all the accounts to make sure the information is correct, and that they're properly categorized. Look for accounts that you don't recognize – they may be false accounts set up in your name by identity thieves.
Credit Inquiries – Requests to view your credit report are listed here, whether they're your own requests, the result of a promotional inquiry, or due to a credit or loan application that you submitted. The first two have their own section and are considered "soft pulls" that don't affect your credit score. The third type is a "hard pull" that indicates applications have been submitted.
Look for any hard pulls that you didn't request. This means someone may be trying to falsely submit credit applications in your name.
Any statements you've made, such as disputed items or applications of fraud alerts, may have their own section or could be included as part of your personal information.
Don't let fear of the unknown stop you. Check your credit report today and use one of the online guides to help you feel more comfortable with understanding the contents. If you don't like what you see, at least you know that corrections are needed. Learn how to make those corrections here and take control of your credit profile.
You can check your credit score and read your credit report for free within minutes by joining MoneyTips.