How to Read A Credit Report

You’ve finally ordered your credit report. Better yet, you’ve ordered all three, and Equifax, Experian and TransUnion are spread on the table before you (actually, hopefully you got them for free on annualcreditreport.com and are reading them on your computer, but bear with me). Now what?

Every credit report uses its own shorthand, and the extra pages enclosed with each explain its abbreviations. In order to read a credit report, you’ll have to become familiar with the abbreviations specific to that report.

All three credit reports have these sections in common:

Personal Information Section: self-explanatory.

Credit Summary Section: This summarizes your accounts by account type. The different types include mortgages, revolving accounts (credit cards), installment loans (auto loans, payday loans, etc), and collection accounts. A count of “public records” may also be shown here.

Account History / Trade Lines Section: Each of your accounts is described here at great length. Most of the details are straightforward. Here are some that might be less clear:

Date Reported: the most recent date on which that creditor reported to the credit bureau.

Payment Status: the status of the loan as of the reporting date.

Balance: the amount still owing on the account as of the reporting date.

High Balance: either the original loan amount, or the highest dollar amount ever owed on the account.

Payment History: the payment status on a monthly basis over the life of this loan. This is shown as a string of numbers, usually where ’1′ = Current; ’2′ = 30 days past due,, ’3′ = 60 days past due, etc.

Credit Inquiries Section: All companies that have inquired into your credit for any reason are listed here. Although your copy of the report shows them all, prospective lenders will be shown only those which were specifically made to approve a credit request.

Public Records Section: If your financial history shows any black marks such as tax liens, court records, bankruptcies, and possibly overdue child support, this is where you’ll see them. This section does NOT list criminal records. Anything in this section of your report will remain there between seven and ten years.

Collections Section: This lists all accounts which have been turned over to collection agencies.

Score Card: Your overall credit rating. It will range from the low 400s to 850. A score of under 575 is considered a credit risk; between 600 and 700: very good; over 700: excellent.

Credit reports do look complicated at first glance, but once you’ve become accustomed to each one’s particular shorthand, reading them will become (almost) second nature.