These days, your credit score is more important than ever. Not only are lenders using credit scores to price loans, but landlords and employers are also looking to these to judge an individual's character. Having insufficient or poor credit can prevent you from obtaining loans, and in some cases, from getting a new job or apartment.
Let us help you identify the important components of your credit report.
When was the last time you checked your credit reports? We encourage you to review all three of your credit reports annually to ensure that all the information reported from financial institutions, collections, and government agencies is accurate. Although all three credit bureaus contain the same basic information on each of your accounts, it can sometimes feel a bit overwhelming to review them. We think you will benefit from the information below by helping you to identify the key pieces of information that are held on your credit reports.
Identifying information-Personal information such as your name and any aliases (ex. maiden name, previous names or misspellings of your name), social security number, date of birth, a list of previous and current addresses, and a list of current and previous employers. A credit report shows if an account is jointly owned but will not specify your marital status. Annual income and balances held at financial institutions do not get reported to the credit bureaus, nor is your level of education.
Credit account information-Under the open accounts section of the report are your current open accounts. These open accounts will remain until you close them or pay them off. Closed credit accounts will show under the closed account section. Each account will have similar credit information reported. These accounts will show the date the account was open and closed, the monthly payment, balance owed, and payment history, however, omitting any interest rates. Depending on the type of credit obtained, you will find a loan amount, or a credit limit displayed. Keep in mind, once an account is closed it will remain on your credit report for approximately seven years.
Inquiry information-Each time you apply for credit, the lender notifies the credit bureaus. This is called a “Hard” inquiry. “Hard” inquiries are reported to the credit bureaus and negatively affect your credit score. A “soft” inquiry occurs when you check your credit. Lenders will also perform a “soft” inquiry when performing account reviews or when marketing pre-approval credit offers. “Soft” credit inquires do not affect your credit score.
Public Record-Bankruptcies, civil judgments, and tax liens get recorded on the credit report. Bankruptcies are listed by the type of bankruptcy filed such as Chapter 7, 11, or 13. Civil judgment will show if you owe someone money (aka…child support). And debt collectors place tax liens on properties to ensure payment before the sale of a property.
Collections accounts-Delinquent and collection accounts show up under the collection or derogatory section of the credit report. Delinquent accounts can come from hospitals, utility companies, or financial institutions to name a few. According to the FICO, utilities are services you pay for and so not considered credit accounts. However, if you become delinquent on these bills, they will show up under the collection portion of the credit report, negatively affecting your score. These accounts, once charged-off by the lender, will also remain on your credit report for approximately seven years. The one type of account that stays on your credit report longer (10 years) is bankruptcies.
And there you have it, the critical categories you need to know about when it comes to your credit reports. If you find that you need some help reading your credit reports, I will be more than happy to assist. You can contact me at Creynolds@newdimensionsfcu.com or 207-872-2771.