How To Read Your Credit Reports

One of the most DAUNTING tasks most people feel when they start their path to credit repair. (looking at your credit report doesn’t have to feel that way!)

Trying to look at a credit report can feel like deciphering a foreign spy code.  Don’t get discouraged!

Many people don’t even know what their read report is.

Have you ever wondered what are these things on my credit report?

 

Well… you are in luck!

Here are the main items that show up that will help you on how to review your credit report:

  • Personal information – Your name and any aliases you have gone by show on your credit report.  Your current address and any addresses you have reported living at in the past.  The places  where you have worked, and your social security number and date of birth show on your credit report.
  • Inquiries from others –Essentially, this is a listing of the companies or individuals who have pulled up your credit.  Since any inquiries will show up on your credit report for 2 years, you can see everyone who’s looking at your information.  This also means that anyone that pulls up your report can see who previously pulled up your credit and what date they pulled it.  Too many inquiries can affect your credit rating.
  • Public records – These are items such as judgments, tax liens, bankruptcies, foreclosures or garnishments such as child support.  Imagine if one of these shows up on your report and it’s not supposed to!
  • Collection accounts – These are reported when the account was unpaid and sent to another company to try and collect the unpaid balance.  These companies are notorious for reporting your information incorrectly.  Don’t let this happen to you!
  • Trade lines – This is the information reported for each of your accounts (mortgage, auto loan, student loan, credit card, unsecured personal loan, time share, etc) It shows when the account was open, how much the limit is, how much you currently owe, if you have been late on the account and much more.  Having something wrong on a trade line can adversely impact your credit rating tremendously.

 

 

Below are explanations and examples of the five main things that will help evaluate your credit report:

how to read credit reportAll about Credit Reports

The personal information that shows up on a credit report that often surprises some people:

  1. It can include your legal name and any alias you have ever gone by
  2. Every address you’ve ever had
  3. Where you work and when it reported you were/are employed there
  4. Your social security number

Inquires that show up are from those looking at your credit. how to read credit report is easier than you may think

  1. Most people are surprised that a bank who has looked at your credit report shows on your report for two years.
  2. Very few people know that almost all banks that you have a relationship with (a loan, credit card, or other product/service they are providing you) can pull up your credit any time to see where you stand financially.
  3. Luckily these inquiries do not affect your credit score and are called “soft inquiries”.  “Soft inquiries” are from those companies “just checkin’” on you.  Whenever a consumer pulls up their own credit it is also considered a soft inquiry.  This is GREAT.  This allows all of us HWA (See my Credit Acronyms) to check our credit constantly, much like you would with credit monitoring.
  4. “Hard inquires” on the other hand are usually bad.  Any time you apply for a loan, it will show as a “hard inquiry”. As mentioned above, these hard inquiries show on your credit report for 2 years.  In a later chapter we will show you how to delete any inaccurate inquiries from your report with a simple letter.

There are several types of Public Records that can show on your credit report:

Bankruptcy

  • Bankruptcy is a legal liquidation process through which consumers and businesses in debt are allowed to eliminate or repay their debts under the protection of the bankruptcy court. The decision to file for bankruptcy should be well thought through, as this may affect your credit standing for the next 10 years or so. Bankruptcy can help you to wipe out debts relating to credit cards, medical bills and unsecured loans; but not child support, spousal support payments, or tax debts. Of course, it’s important that you seek an attorney if you are looking into bankruptcy.

Judgment

  • A judgment is a decision made by a court regarding money owed to a creditor or lender that is probably on the person’s credit report. Failure to pay back lenders could result in their taking legal action against you by filing a suit against you for the money owed. If you lose, the court sets a judgment of what is owed and that judgment will stay on your credit report for up to 7 years. Also, this can happen if you are successfully sued for damages or money you might owe in a civil suit. Such a judgment will also stay on your credit report for up to 7 years.

Garnishment

  • A garnishment is a legal proceeding whereby a creditor seeks and obtains judgment on a debt that allows them to collect payment in installments or in full by seizing the debtor’s bank account, paycheck or any other assets. Wage garnishment is the most common whereby your creditor may obtain a court order requiring your employer to deduct a certain amount every month until the debt is fully paid. Debts that may lead to garnishment include: state or federal taxes, court fines, child support, credit card debt, unpaid judgments and student loans.

Lien

  • A Lien is a “claim” or hold on a property done in order to secure repayment of a debt or satisfaction of a debt. Consensual liens are brought about by express contracts between the creditor and debtor such as in the case of car loans, mortgages and secured credit cards. Non Consensual lien include a tax liens whereby failure to pay taxes may result in the IRS placing a lien on your property.

Collection accounts (are the devil)

  • It’s true; these collection companies are pure evil in our opinion.  They don’t have the right to take on your debt from the bank and hound you for the inflated balance.  If you are getting calls from them, don’t let these collection companies get to you.
  • Now that I’m done ranting about that, a collection company is simply a third party company that is hired or sold your account to collect on.  As many of you may know, they have questionable and sometimes, illegal tactics of trying to collect the debt.

Trade lines are one of the most crucial aspects of one’s credit

  • If you have TOO MANY accounts, it can hurt your credit.  If you have TOO FEW accounts, it can hurt you
  • Trade lines show if you have ever been late
  • They also show when you received the account, the high limit of the account, what the highest balance is that you charged on it, the date of the last activity and much more.

As you can see there is a lot of personal financial information that shows up on your credit reports.

I hope this helps you understand how to review your credit reports.

Making sure they are all correct and in positive standing is important these days with this ridiculous recession we are in. (Let’s pray it ends soon!)

There are some great Credit Laws that protect consumers like you and me.  Click on that link to see the rights you and I have when it comes to these credit reports and getting items removed.

Lots a lot of info to take in and a lot of credit jargon.  For an explanation of all these words and more click my Credit Glossary. Hope it helps!

About the Author

Jeremy Maher dealt with harassing collector calls, debts piling up and damaged credit for years. He improved his situation and started helping others.   That leads us to today, where Jeremy has DIY solutions for stopping collection harassment, eliminating debt and improving your credit scores. His clients can improve their situation within the comfort of their own home.

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