Understanding Your Credit Report

Published January 7, 2013 by

Looking at your credit report will allow you to learn a great deal about your current financial situation. If you have credit cards or other loans, information on how your handling of them is being viewed by other potential lenders is shown in this report. It is important that you are aware of how lenders view you, as being aware makes it easier to apply for car loans or mortgages with confidence. Once you understand your credit report, you can make an informed decision regarding future loans.

Your Credit Summary

After reading through your personal information, you will see your credit summary. This is a list of the accounts that you currently operate on credit. It can include mortgages, credit cards, lines of credit, installment accounts and other types of loans. You will see the term “revolving account.” This refers to a credit card account, as you can use it on a revolving basis. The credit summary section shows how many accounts you have, the balance of these accounts, how many accounts are currently in use, and how many are delinquent.

This section also shows the number of accounts that you have closed in the past two years and how many times you have inquired into your credit. All of this information has an influence on your credit score, so it is important to keep an eye on it.

Credit History

The next section of your credit report is the account history, which is where most of your credit information is found. Every account that you have is listed in detail in this section, along with the name of your creditor, the account number, the type of account, your responsibility to the account and how much you are supposed to pay each month. In this section, you can also see when you opened the account, when the account was last reported, the balance, the credit limit and many other remarks that have been noted by the reporting agency.

Additionally, you can view the payment history of your account, so you are able to find out how often you have been late. This is important to your credit report because making your payments on time is essential to keeping your credit score high.

Your Public Records

If you have ever filed for bankruptcy or had a tax lien, it will be found in the public records section of your credit report. This usually remains on your record for between seven and 10 years, depending on the state. Since public records are particularly damaging to your credit score, you will want to keep this section clear.

Credit Score

All of this information is used to calculate your credit score, which is what lenders will generally look at when deciding whether to grant you a loan. If the lender does a hard check on your credit, it will look a little further into your credit score by reading the entire credit report, but the score is the most vital element of the report. If your credit score is low, reading your credit report will give you insight into why this is the case, which should help you improve your score in the future.