How to Read Your Credit Report
January 28, 2015 : Charmaine Ng – Guest Contributor
Editor’s Note: As you start a new financial year, it’s best to do some housekeeping. Don’t worry; it doesn’t involve vacuums or brooms. Learn how to read your credit report for accuracy and to get a look at your financial health.
With so much attention focused on credit scores, you just might forget to check your credit report. Don’t make this common mistake. The information on your credit report forms the basis for your credit score and can be reviewed when you apply for any form of credit, so inaccurate information could hurt your chances at a fair assessment. Monitoring your reports from all three major credit bureaus is key to keeping everything in check.
If it’s been a while or if it’s your first time, let’s walk through how to request and read your credit report.
Step 1: Requesting
Luckily, you may not have to pay to retrieve your credit reports. You can request reports from AnnualCreditReport.com, a government-mandated site that allows you to retrieve a report from each bureau once a year. In addition, you can view your full TransUnion report on Credit Karma and refresh it weekly to look for updates.
Step 2: Reading
Don’t be intimidated by all of the information included on your credit report! If it makes it easier, you can print out your reports or save them to your computer, giving you as much time as you need to review them in full. In addition, what may look like a lot of text and numbers is actually broken out into several important sections:
- Your credit accounts section lists items such as credit cards, loans and mortgages (you won’t find banking or investment accounts here). Each account will break down further details including your payment history, payment status, credit limit, open date and reported balance.
- Your inquiries section lists hard inquiries and soft inquiries. Inquiries can be placed by creditors when reviewing a credit application and in various other scenarios.
- Your personal information section displays your past and present names, associated addresses and employers. This information is typically retrieved from credit applications you’ve submitted.
- Your public records and collections accounts sections show negative items on your report, like bankruptcies and foreclosures. Information about past-due accounts that have been sent to collections agencies will also appear here.
When reading through your report, focus on the accuracy of the names, creditors, balances and payment statuses. Keep in mind that not all recent information will be up-to-date since creditors report new activity on a monthly basis.
Step 3: Reviewing
After you pull your credit report, there’s still work to do. Up to 25% of credit reports could contain serious errors, and there are many opportunities for new errors to appear. Check your report on a regular basis. If you see something fishy or flat-out incorrect, you may want to file a dispute with the lender or the credit bureaus, so mistakes can be addressed.
Since your credit is reviewed during many situations, including when you want to open a new credit card or take out a mortgage, it’s important to double-check your official credit report’s accuracy. Being conscientious about your credit health can pay off in the long run.
Hopefully this article offered insight into how to read your official credit report. Read more insights on credit and your finances now.