Reading Your Credit Report

If you’re not in the habit of checking your credit report once a year, now would be a good time to start-especially if you’re thinking of applying for a loan. Since items on your report are submitted by third parties, it’s important to check for errors and inconsistencies that could hurt you financially.

Once you’ve requested reports from each of the three bureaus-one good site to do this is www.annualcreditreport.com — read on for a summary of each section and tips on what to look for.

Personal Information

Your name, Social Security number, birth date, phone numbers, and current and previous addresses and employers.

Note: Make sure that your birth date and Social Security number are accurate.

Credit Account Information

The balance and payment history of any credit accounts you currently have (credit union or bank loans, credit cards, mortgages, etc.). Deposit accounts (such as share savings or IRAs) are not listed.

Also included are the amounts you owe on your debts in relation to your credit limits and the frequency and payment amounts on any installment loans (ex: mortgages, auto loans). Any late payments, charge-offs or collection activities appear in this section too. These items will remain on your credit report for seven years.

Note: Make sure that all accounts listed in this section actually belong to you. (If not, you could be a victim of identity theft.) Verify that closed accounts are marked as such. Check records of delinquent payments for accuracy and make sure that your payment history is up to date.

Public Records

Any court records on bankruptcy, tax liens or monetary judgments against you. Most public records can remain on your credit report for seven years. But bankruptcies can remain on your credit report for 10 years, and unpaid tax liens (e.g. property taxes) can stay on your report for up to 15 years. (If you don’t have any relevant public records, this section of your report will not appear.)

Note: This section can be the most detrimental to future credit. Check your report against your personal records to make sure that the information is accurate.

Organizations that have requested your credit file

Your “hard” inquiries will be listed first, followed by your “soft” inquiries. The differences are explained below.

Hard inquiries can be viewed by potential creditors. These are credit checks that have been authorized by you, such as applications for new credit cards or preapprovals for loans. They will remain on your report for two years and can affect your credit score.

Note: The items in this list should be familiar to you. If you see companies listed that you haven’t dealt with, call or write to each company asking them to remove their inquiries. (Contact information should be provided.) Explain why you suspect them to be unauthorized.

Soft inquiries will not be seen by potential creditors. And they won’t effect your credit score. These are usually made by lenders who send unsolicited credit card and loan offers, or from companies you have credit with that check your report periodically.

Note: Although soft inquiries will NOT affect your credit, you can reduce their frequency by asking the credit bureaus to remove you from their marketing lists. Call the opt-out number at 888-567-8688 and follow the instructions.

How to Correct Errors

Since credit reports can change quickly, it’s important to report errors within 90 days. Contact the credit bureau in one of three ways:

  • Online: All three bureaus have online investigation services through their websites.
  • By mail: Return the dispute form included with your report.
  • By phone: Call the credit bureau at the 800-number provided in the report.

Clearly state the mistakes in your report, explain why they need to be corrected, and state whether you want the incorrect items corrected or deleted. Keep detailed records of the action you take. Each bureau is required by law to investigate your claim within 30 days, and to send you a revised report reflecting the results of the investigation. (Remember, they are only required to remove or change information proved to be inaccurate.)