How To Understand Your Credit Report

At least once a year you should that obtain a copy of your credit report. Some time in the future you may want to make a major purchase which would require a loan or line of credit. Whether you obtain this report on line or via mail from a consumer reporting agency is unimportant. Knowing your credit score is important because if it is low there are steps you may be able to take to improve it – but first you must understand it.

Looking at your credit report for the first time when may seem confusing. Your credit score is a three digit number which gives you your overall score against that of other consumers. While this number is important, it is not the most important factor in your credit report. A lender will look at the number of accounts you have and also your timeliness in paying your loans. If you have a lot of financial obligations such as a mortgage, car loan, and several credit cards, a company may deny your loan application. Even if you pay all of your financial obligations on time, it can still have an adverse affect. The reasoning is that your credit is “too deep” and adding another loan payment might make you unable to fulfill your financial obligations. The opposite is also true. If for example you have a mortgage and no credit cards, the lender will not get an accurate idea of how trustworthy you are when it comes to paying back the debt. They may deny your loan because they don’t know enough about you based
on your credit report.

Examine your credit report carefully. A score of 300 to 399 is considered poor credit. 400 to 599 is fair and 600 to 849 is good. If your score is 850 to 930, congratulations! Your credit rating is very good. Pay close attention when analyzing your name and address date of birth and Social Security number. Names that are on the accounts are also important. If you have joint accounts make sure that both names are present. Correcting any mistakes you find is important because it could be related to identity theft. Identity theft is when someone fraudulently uses your personal information usually for credit purposes. Additionally make sure that all accounts that are on your credit report are accounts that you authorized.

Following your credit score, personal and account information, is another section with additional information. A summary of your credit scores from the three main credit reporting agencies follows. In addition, your history of any late payments you have made in the last two years will be included on your credit report. Bankruptcies, liens, and judgments against to you are also part of your credit history. There is also what is called a credit risks score. When your credit risk or explains the reasoning behind a low credit score. Too many open accounts and credit inquiries within the last year can contribute to a high credit risk score, which is something you don’t want but.

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