Terms You Need to Know to Understand Your Credit Report


Your credit report is a snapshot of your “consumer character” and as such, can have some pretty bad implications with the wrong information. Existence for the most part revolve around the decisions we make and we are presented with these decisions daily, sometimes multiple times per day. Poor decisions, such as overspending or higher extending yourself from a credit perspective can have a lasting effect on you and your capability to continue making similar decisions at a later time and time, sometimes, in the case of a bankruptcy, up to ten years. So to an level, your credit report is direct reflection from the consumer freedom you will enjoy or with negative credit, it will be an immediate reflection of your lack of freedom.

Negative credit can affect you in many ways, from getting housing, a car loan, a job, as well as security clearance. If you have been turned down for the mortgage, a car loan, an apartment, or a work because of your credit, you know from personal experience how a negative credit report can shateringly impact your life. Unfortunately, there isn’t anything that can solve these problems quickly. However , there is a specific process and laws in effect that can help you to start fixing your credit. There are 2 different ways to do this: 1) hire someone to get it done for you, or 2) do it yourself and spend the time necessary figuring this out and preparing the necessary docs. When doing it yourself, you may want to look for the guidance of a professional to be certain you did it correctly.


Let’s take a look at what’s good and what’s poor. First, let’s set the variables to which we are evaluated. The FICO system, a system that summarizes your credit risk for lenders, creates a score between 300 and 850 and we all fall somewhere in that range. The interest rate you obtain when you apply for a loan will depend on this score and that can be worth thousands over the life of a loan.

Situation #1, if you have not had any negative marks against your credit score, and by negative we are referring to choices activity, late payments, tax loans, judgments, etc . in the last 24 months with no bankruptcy or foreclosure in the last five years with a credit score above seven hundred, you have a good credit profile.
Scenario #2, if your credit score is below 630 and you have all or even a few of the items mentioned above, you have a bad or less than favorable credit profile.
Situation #3, if your score falls somewhere in the middle of the scores above and you have some of the items mentioned above, you have an average credit profile.
In the credit credit scoring business, different scoring companies use different scoring models. They do this because credit isn’t just credit : there are mortgages, consumer credit, and spinning credit and installment loans. Scores will and should vary between the different scoring methods depending on the facts. Along with general negative items associated with your credit track record, there are other variables to consider and they all have a different weight when calculating your score.

Payment History — 35%
Amounts Owed – 30%
Length of Credit History – 15%
Types of Credit in Use – 10%
New Credit – 10%

Your credit report contains a wealth info about your financial activity. Although credit reports are not easiest reports to understand, the bureaus providing the reports have tried to make them as user friendly as possible.

Personal Information

The first section of your report will cover basic information the name, address, and place(s) associated with employment. This section is used to identify a person as the reports owner. Most likely, prior addresses and places of work will also be included.

In this section, difficult uncommon to have misspellings of your title or variations thereof. Because these misspellings and variations usually link you to a piece of credit, credit reporting agencies will usually leave these variations. It’s your work to ensure your personal information is identifying you and not someone else.

Account Background

This section of your credit report contains the most of the information about your credit. It lists each of your accounts and details how you paid on each of them. Your account history will be extremely comprehensive and will most likely be the hardest area to read; however , it’s important you go through all of it to make sure the information is being reported accurately.

As far as collection accounts, they might appear as part of the account history or even in a separate section, usually tagged negative credit. Where it appears depends on the company providing your credit report. Within the accounts history, there will be several pieces of sub-information.

Company name of the institution reporting the information.
Account number associated with the accounts. The account number may be scrambled or shortened for privacy reasons.
Type of account, i. e. spinning account, education loan, auto loan.
Conditions of repayment. Installment loans include the number of payments. Revolving accounts may leave this section blank or since “revolving”.
Date opened. The 30 days and year the account was established.
High credit is the top amount ever charged on the credit card. For installment loans, high credit score is the original loan amount.
Borrowing limit or loan amount.
Balance. The amount owed on the account at the time data was reported.
Past Due. Amount past due at the time the data was reported.
Accounts status. Indicates the status from the account, i. e. current, overdue, charge-off. Even if your account is present, it might contain information about previous delinquencies.
Payment history. Indicates your monthly payment status since the time your account had been established.
Date reported. The last period the data was updated by the creditor.
Public Records

This section will include information such as bankruptcies, judgments, tax liens, condition and country court records, and, in some states, overdue child support. Based on the type of account, a public record may remain on your credit report between seven plus ten years, ten years being reserved regarding bankruptcies. This section is a collection of the bigger mistakes, not criminal arrests or convictions but enough to severely damage your credit.

Credit Queries

This section provides a detailed list almost all parties who have accessed your credit report inside the past two years. While your edition of the credit report lists several credit inquiries, not all of these appear on the particular lenders’ and creditors’ versions. Only “hard” inquiries are shown to lenders. These are inquiries made when a loan provider checks your credit report to approve your own credit application. Your version will even include “soft” inquiries consisting of queries made by lenders for promotional purposes.

Initially, if you need help, try your loan officer if you are applying for credit and see if they will take some time to describe it to you.
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Most of them will try to help as best they can, especially if you are trying to repair your credit because the loan police officer would eventually benefit when he originates a loan for you. If you are not working with a loan officer and you are while using the DIY credit repair method, you might consider a free consultation with a credit repair company to learn the basics. They will assist you in understanding your credit report and should inform you some of the advantages and disadvantages of doing credit fix on your own or through a credit repair company.