How To: Read a credit report

Federal law says you have the right to a free copy of your credit report once a year from each of the three major credit bureaus, just by asking at www.annual-creditreport.com or calling (877) 322-8228.

Most account information stays on your credit report for seven years. Bankruptcies stay 10 years. Other legal proceedings can stay until the statute of limitations expires.

Stuff you will not find on your credit report includes your income history, your checking and savings account history, your current assets, your driving records or your criminal record.

You also won’t find in the free report your credit score, which is used by truck financing companies and others. It can be purchased for a small fee when you request your free annual credit report or by contacting one of the three bureaus.

The bureaus are required by law to explain anything you don’t understand – just call them, with the report in hand – but here are the basics of what to look for.

CREDIT HISTORY, the biggest section, tracks your record of borrowing and repaying for seven years. Don’t be alarmed if whole credit lines are missing; not every creditor reports to all three credit bureaus.

PUBLIC RECORDS, the section that can hurt your credit score most quickly, is limited to legal proceedings involving your finances: bankruptcies, judgments, tax liens, even divorces and child support payments. Ideally, this section is blank.

INQUIRIES are a record of everyone who’s requested your credit report in the past two years, including you. No one can see it without your permission, but you grant it when you fill out applications for such things as loans and leases.

INSTRUCTIONS for correcting errors often include a form. Errors against you in the public record are the most crucial to correct, followed by errors in your credit history. Be polite but persistent, and get acknow-ledgment of any changes in writing.


Credit bureau contacts:
Equifax
www.equifax.com
(800) 685-1111

Experian
www.experian.com
(888) 397-3742

TransUnion
www.transunion.com
(877) 322-8228


Tips:
Credit history sections of credit reports will have more information than shown here, such as when you opened the account, whose names are on the account, minimum monthly payment amounts, balance history and highest balance.

A high debt-to-credit ratio on a mortgage or installment loan is to be expected, but a high ratio on revolving accounts such as credit cards is a bad sign. A 100 percent figure there means you’ve maxed out the card.

Keeping old accounts open long after they’re paid off actually helps your credit, as it conveys a history of stability.

Being late on your payments hurts your credit. The more recent the delinquency and the larger the sum, the worse off you are.

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