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What’s in a credit report?

Written by: Jeremy Zongker

Thanks to a new federal law put into place in September of 2005,
everyone is entitled to one free credit report each year. This
is so that you can verify that your report does not contain any
false information, and so you can see how your credit rates.
Getting your annual free report is as easy as going to the
authorized source, www.annualcreditreport.com and requesting one.

Once you have your free report, what in the world do all those
abbreviations, numbers and codes mean?! The most widely used
system for scoring is the FICO score, developed by The Fair
Isaac Corporation, and the number determines the risk to extend
credit to an individual. credit reports are usually divided into
sections; identifying information, public records, credit
history, and inquiries to your credit report from creditors
looking to extend you credit based on your Credit Score.

The identifying information includes your name, address, and
social security number. Make sure they are all correct. Usually
this section will also include a list of your previous
addresses, your date of birth, phone number, spouse’s name,
employers information.

The public records section is the section you hope has no
information. This is where a bankruptcy or judgment would show
up on your report, and it will harm your rating more than
anything else on the report, and take longer to repair.

The credit history section is the most confusing. It will list
every creditor you’ve ever had business with, including accounts
that have been closed and those that remain open with no
balances, and accounts that you are currently making payments
on. Depending on which credit reporting agency you get your
report from, this section will actually be displayed differently
on each report. Experian’s report displays it in “english”, and
states everything in common sense terms, like “pays on time”,
“pays 30 days late”, etc. Reports from other agencies might use
numerical codes in a table that you have to refer to another
page to find out what each code means. Either way, make sure you
agree with each creditors reporting of you since this is how
your score is determined. If you have accounts that you don’t
have the credit cards for anymore, or a loan that has been paid
off but remains on your report as a revolving credit (money
available to you as you pay it down), call and write each
company to ask them to close the account completely and report
that to the credit agencies. Otherwise, it appears that you have
all of that money available to you, and that goes against your
debt to income ratio.

The section called “inquiries”, and it includes a list of
everyone who has ever looked at your report. This will include
credit companies you’ve contacted to request a credit card or
loan, but it will also include what is considered “soft”
inquiries. Soft inquiries are any promotional offers, such as a
retail store checking into your credit history to determine
whether or not to mail you an offer for their credit card. Soft
inquiries do not harm your overall Credit Score.

You can also get a copy of a credit report any time you’ve been
denied credit. This is because there is always the possibility
that there are errors in your report, which prevented you from
obtaining the credit you applied for. Regardless of how you get
your report, take the time to look it over and find any
discrepancies (immediately call the creditors in question and
straighten it out) and close out any accounts that you no longer
use but are showing open and available to you on your credit
report. Having your report will show you where you stand if
you’re considering going for a mortgage, new vehicle, or other
loan.

About the author:

This article has been provided courtesy of Creditor Web,
http://www.creditorweb.com .