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March 8, 2020 2 min to read

How to read and understand your credit report

Category : Finance

It’s pretty essential to have a review of your credit periodically. But your credit report can be confusing to navigate as it contains a lot of information. Here’s how to interpret and understand your report.

If you’re reading a report for the first time, or if your report includes a lot of activities, a credit report can be complicated. Don’t let that prevent you from keeping up with your credit. You find it pretty easy to read once you learn how to.

For many reasons, experts recommend that you check your credit report once a year. The credit report is simply a collection of your debt history and can, therefore, affect your ability to open financial accounts as well as your loan interest rates.

To have an annual review of your report helps ensure your report is accurate and up-to-date. Again, if you’re a victim of identity theft, your report is likely to contain errors. Above all, reviewing your credit keeps you conscious of your financial situation.

The Anatomy of Your Credit Report

You might see several sections in your report. Still, most of the information it contains are grouped into four major categories, which are, creditor information, personal information, public record information, and credit inquiries.

Personal Information

This section is quite self-explanatory, but it mainly includes:

  • Your name and aliases
  • Social security number
  • Date of birth
  • Employment data
  • Public record information
  • Current address
  • Previous address

Public Record Information

If you have any open legal issues connected to your financial situation, they’ll all reflect in this section. These issues include:

  • Bankruptcies
  • Wage garnishments
  • Liens
  • Judgments

If you are looking at a TransUnion report, you’ll also find an estimated date of removal for each of the items.

Creditor Information

This section contains the meat of your report. It also contains all your existing lines of credit. If you have a credit turned over to a collection agency, it’ll also be included.

Some of the basic information each account section contains include:

  • The account status: Open, closed, charged-off
  • The responsibility of the account: Individual or joint
  • The account balance
  • Most recent payment
  • Past due information
  • Your credit limit

Generally, your good accounts and adverse accounts are split:

Adverse Accounts (negative item)

These are the accounts that negatively affect your credit. If you own an account in this section, you are likely to have made late payments, the account might have been sent to a collection agency, or the balance might be outstanding…
 
Continue reading the article and learn more about the credit report on Paul Verbiton’s blog.
 
 

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