Credit Reports – How to Understand them?

Understanding the Credit Report

I am sure by now you have realized the need to maintain a good credit score and the critical role played by the Credit Report. To do all this and more, you need a basic understanding of your credit report. Understanding your credit report ensures tracing any discrepancies in time and resolves them before they affect your credibility.

The Credit Report Format

A credit report is said to reflect the credit habits of the consumer. The consumers ideally should be receiving a copy of their credit atleast once in a year. They can also otherwise get details about their credit report whenever they require. It is important that consumers read through the report and make sure there are no mistakes or wrong entries in the report so generated

The credit reports are provided by three credit reporting agencies namely TransUnion, Equifax and Experian. The consumers should get in touch with these agencies in case they find any discrepancy in their report.

To understand any report, it is important to be aware of the format and the information contained in it. Let us now analyze the four sections of a credit report.

• Identification Information – This section of the credit report consist of contact details of the consumer such as name, address, contact number, driving license number and the credit account number. Ensure there are no spelling mistakes and wrong entries in this section.
• Credit Report History – This is the main body of the report. This section should be carefully scrutinized to locate any sort of difference from the expected. The size of this section depends upon the spending habit of the consumer. This section will be critically viewed by the prospective lenders and employer to ascertain the credit worthiness of the individual under scrutiny. The name of the creditor, account number, the nature of transactions, the amount due and the outstanding balance.
• Public Records – This section of the credit report contains details about tax dues and bankruptcies if any filed. Ideally speaking this section of the credit report should be blank. This should be carefully scrutinized to ensure that wrong entries of similar account numbers do not appear in this statement.
• Enquiries – This section displays the list of employers and lenders who requested for a copy of the credit report and related information of the consumer.

Given that the financial credibility of an individual is clearly dependent on the credit report details, it becomes an important job to keep track of credit report and the details furnished in it on a regular basis. How regular are you?