The first step toward raising your credit score is to check your credit report. You are entitled to a free annual credit report from each credit reporting agency, but once you have your report in hand you might find you have more questions than answers. To understand what your credit report is saying about you it is important to know what it contains.
Personal Information
The personal information section contains identifying information such as your name, birthday, address, and telephone number. Often this section includes any other names you’ve used in the past, the name of your employer, previous addresses, driver’s license numbers, and your spouse’s name.
Occasionally this information can be outdated or contain misspelled names. As long as this information still applies to you, these variations won’t hurt your credit score.
Understanding Credit History
The bulk of the information affecting your credit score can be found in the credit history section. Here you will find a list of all of your accounts. In addition to listing the name of each creditor the report will usually contain the following:
- Type of account (revolving debt, auto loan, school loan, mortgage, etc.)
- Responsibility (individual or joint account)
- Minimum monthly payment amount
- Date the account was opened
- The date of the last time the creditor reported account information to the credit bureau
- Credit limit or loan amount
- The balance owed on the account
- Payment status (current, past due, etc.)
- Payment history
The payment history may be readable in plain English, though more often it will display the payment history using the following numeric codes:
O – New account, no data reported yet
1 – Paid as agreed
2 – 30 to 60 days late or 2 payments late
3 – 60 to 90 days late or 3 payments late
4 – 90 to 120 days late of 4 payments late
5 – 120 to 150 days late
6 – 180+ days late
7 – Wage garnishments, debt adjustment or other modified payment plan
8 – Repossession
9 – Charge off
Credit Inquiries, Collections, and Public Records
The Inquiries section lists all the times your credit report has been pulled. The two types of credit inquiries are known as “hard” and “soft” inquiries. When you apply for a new loan or account a lender will pull your credit report. This is a hard inquiry. Credit reports requested for background checks, or for promotional purposes will result in a soft inquiry. Only hard inquiries will affect your credit score.
Anything listed in the Public Records and Collections sections of your credit report will usually negatively impact your score. Public Records will list items such as bankruptcies and tax liens. The Collections section will display any accounts sent to collection agencies. The amount owed and contact information for the collection agency may also be found in the Collections section. Items in these sections will usually stay on your report for 7 to 10 years.
Raise Your Credit Score by Fixing Errors
It is important to remember that credit agencies simply report the information your creditors provide to them. It is up to you to verify the data and correct any mistakes. The smallest discrepancy could have a dramatic impact on your score. Check your reports from the three main reporting agencies; Experian, Equifax, and TransUnion and make sure you contact each, in writing, about the mistake.
Sources:
- Consumer Credit Counseling Service of Orange County – Reading a report
- Credit FYI – Your Key to Cracking Credit Report Codes by Katelyn Hayes
- Lending Tree - Credit Inquiry: Soft pull vs. hard pull
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