How To Read A Credit Report

With credit reports playing an increasingly important role in all our lives it’s becoming almost essential to be able to read and fully understand one. While they may vary between the different credit bureaux they are all essentially the same as they should all contain the same information. In this article we will take a look at how to understand a report using Experian for our example.

Of course the first thing to do is to get a copy of your current credit report and usually the simplest way to do that is to request it online.

Once you have your report you will need to make sure that you have all your mortgage and loan agreements to hand together with all the paperwork for each of your credit cards. Don’t forget to include all your credit cards even those without an outstanding balance.

The reason you need all your paperwork in front of you is to be able to check each and every detail to enable you to see how everything fits into place on the credit file itself.

The report is made very simple for you to read because it is split into sections where all the different types of information are gathered together.

At the top of the report is your name, the date you requested it and very importantly the report number. You will need this number if there is anything that you wish to speak to the credit bureau about as without it they won’t be able to cross check information accurately.

In the first section there is what is known as public information. In essence what this is, is information that the bureau have gathered about you from publicly available sources which may include details of outstanding tax liens and any bankruptcies which relate to you. While ordinarily negative information is only kept on file for 7 years bankruptcy details are left on your record for 10 years and unpaid tax liens for 15.

Section two is devoted to the credit information that Experian hold on you and this is where you will need the financial agreements and paperwork we talked about above.

As you read this section you will find that there are surprisingly full details about your accounts including when you opened the account, whether anyone else is responsible for it, for example your spouse or a co-signer, the amount it was for and the current balance.

The thing which surprises most people reading one of these reports for the first time is the fact that any late or missing payments are logged on there even when they are paid up. This of course is essential for potential lenders when they are deciding whether or not to offer you finance in the future.

The next part of the file covers inquiries made about you and is split into different sections which relate to who made the request and why.

The first part is for requests made as a result of you applying for funding while the second part covers any requests made for such things as monitoring by existing creditors, pre-approval offers and your own requests.

Finally the last section is all your personal information which you should check just as carefully as the other sections to ensure that all the information is fully complete and correct.