These are numbers on the screens and while they have lives behind them it is far more than someone can deal with while looking at the numbers, there are thousands and millions of them.Pat Curry
As an employee of one of the world's largest banks, I have learned the importance of keeping up on one's credit report. I am by no means an expert but through various training sessions and seminars I have learned enough to read a credit report, which is something everyone should learn to do.
First of all, get a copy of your credit report from each of the three major credit bureaus. There are two fast ways to get these. The first is you can go online and pay for them. They usually cost about $9 each. The other route is a free trial of a credit monitoring service. These usually offer a 30 or 60 day free trial, and after that they "conveniently bill" the major credit card you used to sign up for the trial. These are fine if you either want their service, or can remember to cancel in time.
Either way once you have the reports just look them over. You will notice they contain your credit score, and four major sections. These are the identifying information, credit history, public records, and inquiries.
The credit score called your FICO and will be a number from 350 to 850. This part is standardized, a 600 at TransUnion is the same as a 600 at Equifax. The higher the number the better credit risk you are. Your score is incresed with on-time payments, and lowered by late payments and inquiries. Generally a score of 660 or better is a good risk, but all lenders have different guidelines. Once you digest that you can look at the other four sections of the report.
The first section, your identifying information is pretty self-explanatory. It may contain and and all of the following:
Address
Pevious address
Telephone numbers
Social Security Number
Employer
Previous employer
Drivers license number
Previous drivers license number
Spouse's name
Check this closely, errors here may be an indicator of a
mistake which could affect your credit, or worse could be a sign of
identity fraud.
The next section is your credit history. This will contain all of the different accounts you have and have had over the past seven years or so. This section is set up differently depending on credit bureau and where you got your report. No matter where you got it from it will list each account, or "trade line" as they are called. For each account there will be listed some basic information including:
The account number
When you opened it
If it is an individual or joint account
Original loan amount
Balance much you still owe on it
Next, there is a section
devoted to how well you have maintained that account. For each account there may possibly be codes, some of the common ones are:
CURR WAS FOR - forclosure procedings started but now the account is current
CURR WAS 30-2 - the account was 30 days past due 2 times
NOT PAY AA - the account is not being paid according to the agreement
30 DAY DEL - the account is currently 30 days past due
For all of these type of codes there is normally a section on the report that gives an explanation of any that are used. Some reports will also list accounts as positive (paid on time), negative (default, or other serious problem) or nonrated (usually indicates a few late payments). The
nonrated and
negative usually have a code which shows the nature of the problem. This second section of your report is the most likely to contain errors. Dispute any you find, the
node written by
cahla gives good advice on this that I have seen used successfully time and time again.
Ok, now the third section. Honestly, you want this to be blank. In this section will list things like, tax liens, unpaid child support, bankruptcy, and judgements. These are red flags for credit risk.
Finally, the last section is the inquiries. Anytime someone looks at your credit report that counts as an inquiry. Inquiries come in two types.
The first type is a "hard" inquiry, which means a report was pulled in order to obtain credit. These can also show up when you get a copy of your report for yourself depending on where you get your report from. A bunch of these showing up in a short period of time can be harmful to your FICO. Although many inquiries, say within two weeks of each other show up as one inquiry. Many people believe that too many inquiries can hurt your credit but it really depends on where they come from. One thing to keep an eye on with hard inquiries is if you see any you don't recognize. This could be another red flag that you may be the victim of identity fraud.
The second type of is a "soft" inquiry. These are done by companies to get an overview of your credit to assess your credit worthiness. You know those 500 pre-approved credit card offers you get a week? Those are the result of a soft inquiries done by marketing departments somewhere.
Now once you have read all of those numbers and feel like you have a good grip on your report you can pat yourself on the back and get to work fixing it. Some recent statistics state that 80% of credit reports contain errors.
But who believes statistics anyway?