Analyzing Your Credit Report

Now that you have obtained your credit reports from the various credit reporting agencies, it is now time to learn them inside out. Know what your creditors are looking at and what for. Generally, the reports present the same kind of information in the same basic pattern.

The report will identify you: this will include your name, your date of birth, place of birth, social security number, current and sometimes up to ten previous addresses, your employer, and the date your file was opened.

Your family status will be reported: marital status, and your spouses name if applicable, and the number of your dependents, if any.

The report will present limited notation of public record information: court judgments, lawsuits, tax liens against you, bankruptcies, and perhaps the death of your spouse or your divorce may all be reported.

The report will present a record of your credit accounts: loans, charge accounts, etc., will be reported, whether current or former, whether they are individual or joint accounts, the length of time you have held each account, the credit limit, how much you still owe, if you make your payments on time, recent (within seven years) past due accounts, accounts turned over to collection agencies.
Finally, your report will list any inquiries received by the agency within the last year (CHECK FOR ACCURACY) for information about your credit rating.

Each of these sections is very important for you to understand and control.
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Possibly less obvious that what is included in your credit report, but potentially very important to you, is what is not included in your report. We know that negative information, for example, sixty day notices or accounts sent to collection agencies, may be included in your credit report by-law for no more than seven years. Bankruptcies may be reported for as long as ten years. However, if your credit report is being evaluated for employment paying $20,000.00 or more per year, or if you are seeking credit or life insurance coverage valued at $50,000.00 or more, the time limits do not apply.

Anyone making an investigative report on you must notify you within three days of making the report. Usually, the credit reporting agencies will mail you a copy of any report they supply to an employer or prospective employer. The report is meant to provide only objective, verifiable information and will not make any recommendation about whether or not credit ought to be extended to you, nor will it make any statement about your character or reputation. However, this is basically exactly what it is doing, especially now that the credit reporting agencies have now assigned a Beacon Score to your individual credit report that only your creditors see. This is why it is so important for you to secure a copy of your report in the same way as it goes out to your creditors.

Briefly, the beacon score rates you as a potential credit account for your creditors. They no longer need to learn how to read your report, only to determine if your score (which is assigned by the credit reporting agencies) is high enough for them to extend you credit. Finally, you may discover that your report contains some gaps in your credit history, which are frequently due to the way in which the credit reporting apparatus functions, or fails to function. In other words, if you have not provided enough information on your credit application, the credit reporting agencies can sometimes fail to pull a complete credit report based on the lack of information. Lack of information can also cause a creditor to turn you down for a loan.

A final note in this overview of credit reports regards the types of reports, which may be requested for information about you. These are two basic kinds of credit reports: the in-file report and the updated report. The in-file report is exactly as its name suggests. It consists of credit information that the agency has on hand at the time of the request. Because creditors submit information to the reporting agencies every one to three months, and because it takes the reporting agencies about a month to process this information, the material in the in-file report could be two to four months old at the time the report is delivered. The updated report, as you expect, is the kind requested when you apply for long term or large credit, such as a real estate loan. In this case, the credit reporting agency will contact each of your creditors to determine your current credit status. This suggests, of course, that you must remain on top of things in your report. It is relatively easy to correct errors or negative remarks in your in-file report type because that kind of report presents your credit, as it was a couple of months previously. But what goes in your updated report will be what is happening now.