A guide to reading your credit report

Free Credit Report
A guide to reading your credit report
4 years ago
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Credit reports play a large part in the financial life of consumers. Potential lenders, creditors, and employers often reference them in order to determine the credit worthiness of individuals. Therefore, obtaining your credit report either from one of the three major credit bureaus, Trans Union, Equifax, or Experian or from an independent credit bureau is an excellent idea. Once you have your credit report, what will you see?

Although each bureau provides a slightly different layout for their credit report, similar types of information are included on them. Typically, this information is broken down into four areas of interest: personal, credit, public record, and inquiries.

The personal information section includes the consumer's name, any previous names, the individual's social security number, a current address, any previous addresses, the date of birth, a current telephone number (if available), a current employer (if available), and any previous employers.

The credit information section includes specific account information culled from existing accounts, detailed account information from current accounts on which the consumer is listed as one of the authorized users, and additional account information from any past accounts. This information usually includes the opening date of the account, the credit limit or loan amount of each account, the balances, payment terms, and the monthly payment history. Depending on the policy of the credit bureau, positive information will remain on the credit report indefinitely. Plus, negative information that is listed on the account usually remains on it for seven years.

The public record information section includes information from many governmental sources including court records. It contains bankruptcies, past due child support payments, and tax liens. Public record information usually stays on your credit report for about seven years. The exceptions are bankruptcies and tax liens. Paid tax liens stay on your credit report for seven years. A Chapter 13 bankruptcy stays on your report for seven years, a Chapter 7 bankruptcy stays on your credit report for 10 years, and an unpaid tax lien stays on your report for 15 years.

The inquiries found on your credit report can be either hard or soft inquiries. Hard inquiries are entered on your credit report at the time they occur and stay there for about two years. Hard inquiries occur when the consumer requests some form of credit. Lenders, credit card companies, and potential property owners request a credit report to determine your credit worthiness. Multiple hard requests within a short timeframe place a negative effect on a credit report.

Soft inquiries occur during requests for credit reports by lenders or credit card companies that want to issue pre-approval letters to consumers. Usually, they are not included in the credit report that you see.
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