Knowing how to read a credit report might assist you in spotting inaccuracies and suspicious behavior. However, this is only possible if you know exactly where to search. You may learn a lot about your financial status from the information in your credit report. Personal information, such as your complete name, date of birth, and address, may also be included in your credit report, which may include a history of your credit accounts.
However, understanding your credit report and how it pertains to your personal finances can be a challenging task to do. There are distinctions between TransUnion, Equifax, and Experian reports that are discussed in this advice on how to obtain a free credit report. Understanding the importance of a credit report will aid in your money management education.
Your credit report and your credit score
Even though they have a significant link, your credit report and credit score are not the same thing. When you utilize credit, your credit report and credit score are affected. This includes recent credit inquiries and the number of accounts you have opened or canceled.
In contrast, your credit rating is based on your credit history. Much to getting an assignment graded on how well you do your work in school, this works in the same way. Like your grades in school, you are graded on how responsible you are with money.
Depending on your score, lenders and credit card issuers can decide whether or not to provide you with a loan or credit product, and if so, what interest rate you would be charged. Credit rating formulas might vary widely, therefore it’s important to be aware of this. As a result, you may have a FICO or a VantageScore depending on the credit rating technique used.
Your credit report includes information on your credit utilization. Reports are available that cover everything from personal information to information on all of your financial accounts (such as credit cards and student loans), as well as any bad information (such as bankruptcies or foreclosures) that may have been gathered about you. However, your credit score is completely omitted from your credit report.
Using your credit report to check for errors or instances of identity theft is the best use of your report. Credit scores might be lowered if your payment history or account limits are incorrectly reported to lenders. If you don’t recognize the account, it may have been set up in your name without your knowledge.
How to obtain a copy of your credit history.
You are entitled to a free copy of your credit report from the three main credit agencies, TransUnion, Equifax, and Experian, every year under the Fair Credit Reporting Act.
Visit AnnualCreditReport.com to get your free credit reports in a more simplified manner. Other websites that claim to offer free reports might be frauds; only this official website has been given permission by the federal government to do so.
AnnualCreditReport.com explains how to acquire your free credit reports in three simple steps:
- Completing a form. Your legal name, present US address, former US address (if relevant), and Social Security number should be entered into the online request form.
- Make your own reports. Choose from TransUnion, Equifax, and Experian to receive your credit reports. Each of the credit bureaus can provide a report, but it can also be a single report from one of the agencies. To request several reports, you don’t need to fill out additional forms.
- Online, you may ask for and evaluate your reports. Before you can get your credit report, you’ll have to answer a few additional questions. Filling out your personal information isn’t as tough as answering these questions, which may require you to access your financial documents. This is done to protect your reports so that only you have access to them. This process must be repeated for each credit report that you’ve requested in the past.
It’s important to know how to read your credit report
All three credit reporting agencies have their own unique formats, but the core information and sections are the same for all three (more on that in a moment). In contrast, you won’t normally see information on your credit score or your rent or utility bills or your debit card use, or your spouse’s credit history on your report. When you’re looking at your free credit report, these are some of the most frequent parts to look for:
Information that may be used to identify or contact you, such as your name, address, and Social Security number. Other information that may be included includes your name, residence, and employment history.
Verify the accuracy of the information in this area of your credit report. Your name may have many various spellings, so don’t worry about it. Shortening your name for credit applications or changing it after marriage may have resulted in an incorrect name being assigned to you.
However, if any information on your report is incorrect, you may need to contest it. The method for disputing mistakes on a credit report differs slightly across the three major credit bureaus.
There’s a good chance your credit history has the most information on it. All of your credit accounts and loans will be included here, as well as their relevant details. Included in this section:
- Lender name, address, and phone number
- Account type
- Account balance
- Account terms
- Credit limit or total line of credit
- Status of the account
- Payment history
The information in each account should be checked to make sure it is correct. Checking your credit report for inaccuracies might help you improve your credit score. Consider whether you made late payments on a certain account while usually paying your amount in full. If so, you should look into the matter further.
When anybody, including yourself, checks your credit report, you’ll see a credit inquiry. Inquiries that are classified as “soft” or “hard” fall under these two groups. When you request your credit report, you get a pre-approval offer for a credit card or loan, or a present lender analyzes your credit accounts, a soft inquiry is made.
When it comes to hard queries, your credit score might be negatively impacted. When you apply for a credit or loan, you’re likely to encounter these. This might be for a new mobile phone or internet service contract, a credit card application, a loan application, or anything else. While hard inquiries remain on your credit report for up to two years, the influence they have on your credit score diminishes throughout that period of time.
Re-examine your inquiries to be certain you understand what they are and why you received them. After two years, be on the lookout for hard inquiries to disappear from your reports.
Credit reports may include public data such as bankruptcies, civil judgments, and tax liens, which might affect your credit score. These kinds of bad elements might hinder your financial chances and should be checked for their correctness. They should be eliminated. As a result, you’ll want to make sure that any bankruptcy stays off your credit record for the full seven to ten years that it is meant to.
Your credit report will include any accounts that have been sent to collections. Your credit report may also contain information about other kinds of collections accounts. Delays in payments to physicians or hospitals, internet service providers, mobile phone companies, banks, and others may be included in this category. Start a dispute to get the entry amended if an account is wrongly designated as collections.
How to view a credit report from TransUnion
To be able to read a TransUnion credit report, you must first comprehend how the reports are organized. Like Equifax and Experian credit reports, TransUnion credit reports are broken down into categories as well. TransUnion credit reports include the following sections:
- Identifying information
- Public records
- Credit history
This information is self-explanatory, but the TransUnion credit report numbers could be unfamiliar to you. A credit account with “I05” in the “MOP” column can be confusing to you, since you may not know what it represents.
There are two columns in this table: “MOP” stands for Payment Method and “I05” is an account type and its payment status. Using the “I” stands for “Instalment,” while the “05” is for “120 days or more after the due date.” Hence, this is a long-overdue monthly payment on a debt.
How to read a credit report from Equifax
TransUnion and Experian credit reports show comparable information as does Equifax. The following elements of your Equifax credit report should be known to you if you wish to learn how to read one.
- Personal information
- Credit accounts
- Inquiry information
- Bankruptcy policy records
- Collections accounts
For a more accurate comparison of Equifax credit report codes, see the Equifax lexicon and its definitions, which are quite comparable to those on TransUnion and Experian credit reports. A payment method of “0” with Equifax, for example, indicates that the account is “too new to rate; authorized but not utilized.”. In the case of Experian, “Current with Zero Balance Reported on Tape” is what this code stands for.
Experian credit reports: How to read them
Learn how the Experian vocabulary words pertain to these parts if you’d want to learn how to interpret an Experian credit report.
- Personal information
- Credit history
- Credit inquiries
- Bankruptcy and court judgments
However, the sections and labels differ from those seen on a TransUnion or Equifax credit report. Experian’s glossary contains definitions and credit report codes that will help you better understand your credit report and the data it contains. You may enhance your credit score by disputing and fixing inaccuracies in your report. In addition, Experian employs the FICO® Score, which is a scoring methodology.
Your credit score can be improved by using a service such as Experian BoostTM.
1 Experian Boost assists you in reporting and adding to your credit file positive payment history on bills you are already paying. It’s possible that you’re thinking about things like your phone bill, utilities, and streaming service fees here.
Even though each credit bureau has a different version of your credit report, it’s possible to take in all of your information at once. However, it’s worth the effort to have a better understanding of your financial destiny.
Once you’ve learned how to read your credit report, check to see whether all of the information is consistent with your accounts, loans, and credit card payments. Consider filing a dispute if it doesn’t work out. Keeping an eye on your credit report might help you maintain track of your finances and perhaps boost your credit score.