How to Read and Understand
Your Credit Report

Getting your credit reports is one of the best things that you can do when you plan to get a loan of any kind in the future. Obtaining a copy of your credit record can help you get pre-approved for a mortgage loan as it will be able to keep you fully informed with how your credit stands.

But once you've got the report you might get confused as there are a lot of numbers, abbreviations and terms you need to decipher. How do you read and understand terms such as trade lines, charge-offs, and other terms?

What is a Credit Report?

Your report is a document that lists your credit and repayments history as well as any public records such as judgments, bankruptcy filings and tax liens. It's prepared by nationwide consumer credit bureaus and sold to creditors, insurers, employers or other businesses.

Consumer reporting services compile your past credit activities based on the information they get from your creditors. They record where you live, what you do for a living, where you have applied for credit and how you pay your mortgage, rent and car payment. This information is sold to prospective lenders and the other businesses that use it to assess your applications for credit, insurance, or employment.

Information Included on Your Credit Report

The type of information included on your credit record is personal identifying information, credit history, public records and inquiries. Here is a brief description of each item:

You will have the personal identifying information such as your name, current address and date of birth as well as any of your past addresses. All of your past and present employers will also be recorded on your report.

The credit history section covers everything relating to any financial transactions that you have entered into. This includes each account you made with your creditors along with the name of the creditor and the account number.

Every loan that you have ever had will be recorded along with the dates that they were opened, the type of the credit, the amount of the loans, how much you still owe, and how well you've paid the loans. There will be notes about any late payments or defaults of loan repayments like: never pays late, typically pays 30 days late, etc.

In the public records section there are details of bankruptcies, taxes unpaid or outstanding, and any problems with collection agencies, if any. This is the type of information that you don't want to be there because it will affect your credit score and make it hard for you to get credit.

Inquiries section is a section that lists everyone who asked to see your credit report. Each time you apply for credit, your credit bureaus will place an inquiry and who has made it at the bottom of your reports.

Any lender will be able to see when you have tried to get credit from looking at inquiries as it records the times you apply for loans. Potential lenders look at too many inquiries as negative points and they base part of their credit decision on that info.

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Credit Report

How to Read and Understand Your Credit Report

What is a Credit Report?

Information Included on Your Credit Report

How to Read and Understand
Your Credit Report