| How
to read and understand your credit report | | |
|
- Whether the
account is in your name alone or with another person
- Total amount
of the loan, high credit limit or highest balance on the card
- How much
you still owe
- Fixed monthly
payments or minimum monthly amount
- Status of
the account (open, inactive, closed, paid, etc.)
- How
well you've paid the account.
On Experian's report, your payment history is written
in plain English -- never pays late, typically pays 30 days late,
etc. Other comments might include internal collection and charged-off
or default.
"Charged-off means the creditor
has given up, thrown in the towel," Ulzheimer says. "He's
made efforts to collect and written it off."
Other
reports use payment codes ranging from 1 to 9; an R1 or I1 on a report is an indication
of a good payment history on a revolving or installment account.
The next section is the part you want to be absolutely blank.
The public records section "is never a good story," Sweet says. "If
you have a public record on there, you've had a problem."
It doesn't list arrests and criminal
activities; just financially related data, such as bankruptcies,
judgments and tax liens. Those are the monsters that will trash
your credit faster than anything else.
The
final section is the inquiries. That's a list of everyone who asked to see your
credit report. "Any time anyone
gets into the report, it'll post an inquiry," Ulzheimer says. "If you
call the credit bureau and ask for a copy, it will be on there. It's a very detailed
entry record. It's great for the consumer." Inquiries
are divided into two sections. "Hard" inquiries are ones you initiate
by filling out a credit application or taking your child to the orthodontist.
"Soft" inquiries are from companies that want to send out promotional
information to a pre-qualified group or current creditors who are monitoring your
account. The soft inquiries are only shown on reports given to consumers, according
to Sweet. You may have heard that
a large number of inquiries can have a negative impact on your credit score, but
you're probably OK. "The vast
majority of inquiries are ignored by the FICO scoring models," Ulzheimer
says. "They're not the steak in the steak dinner."
For instance, the FICO scores have
at least a 30-day buffer period where auto and mortgage inquiries
are initially bypassed and not counted. It also counts two or more
"hard" inquiries in the same 14-day period as just one
inquiry.
"You
could have 30 in two weeks and it only counts as one," Ulzheimer says.
If you find a mistake on your credit
report -- an account that isn't yours or a disputed amount -- you'll
need to fill out the form that comes with the report or follow the
instructions on the explanatory sheet.
The
process takes time because the creditors have 30 days to respond to a charge of
a discrepancy. As long as a charge is in dispute, that dispute will show up on
your report. Long-time lenders say it's common for reports to have errors. Some
estimate that as many as 80 percent of all credit reports have some kind of misinformation. Amy
C. Fleitas contributed to this article. | 
