Important Tips on How to Read a Credit Report

All individuals with a credit history are allowed by law to access a free copy of their credit report from all three major credit reporting bureaus once per calendar year. These bureaus are called Equifax, TransUnion, and Experian.

All consumers can and should obtain their free scores and review them annually. This can help them to monitor their credit. Reviewing their free credit reports once a year can also alert them to any potential identity theft. For example, let's say that someone has stolen your name and social security number, and has used it to open credit card or other financial accounts.

By looking at the information on your credit report, you can be aware that this is happening and stop it before it becomes a bigger problem. Identity theft is increasingly becoming more common, and an easy way to protect yourself is to monitor your credit report. The credit report that you get for free will include all the information that is used to calculate your numerical score, but it will not contain the number itself.

By reviewing the information in your report you should be able to estimate pretty nearly what you actual score might be. If you want a hard copy of your score, there are many virtual companies willing to give you access to your score for a fee. Technically, the credit score is a "free" gift that comes with the purchase of monthly identity protection or some other similar service. So do you know how to read credit report?

Your credit report is divided into four basic sections. The first section contains personal information about you, including social security number, address, driver's license number, and spouse's name.

The next division is your credit history. It includes the open lines of credit you have, their dates of origination, total loan amount (or credit card limit), and your status of payment on the account.

The third section is called public records. Any financial public action such as bankruptcy, tax liens, foreclosures, and so on will be recorded there. Anything on the public records section is negative and there before you want that section to be blank, or else your credit will likely suffer.

Last, there is a section for inquiries into your credit. Whenever you apply for a loan, your lender requests to see your credit report. FICO scores only count all inquiries in a 30-day period as a single inquiry, so shopping around for a loan in a short time period is okay once in a while. Too many inquiries into your credit report, however, signals someone who is potential financial trouble, and their credit score will reflect that.

Source by Michael Gentleman

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