A
credit report is divided into 4 sections: identifying information, credit
history, public records and inquiries.
Identifying
information
A
credit bureau report contains basic identifying information such as:
·
Name
·
Social security number
·
Current/previous address
·
Telephone #
·
Date of birth
·
Driver's license #
·
Employer
·
Spouses name
Credit
history
Includes
previous and current types of credit, name of the creditor and account number
as well as:
·
When the account was opened
·
The kind of credit (installment, such as a
mortgage or car loan, or revolving, such as a department store credit card)
·
Whether the account is in your name alone
or with a 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.)
·
Payment habits/How well you've paid the account.
In
reading your report and "O" means open account, "I" is
installment and "R" is revolving. Payment codes range from 1-9.
"1" is the best and "9" is the worst in terms of payment
on time and in full. An R1 or I1 is an indication of good payment history.
On
Experian's report, your payment history is written in plain English - never
pays late, typically pays 30 days late. Other comments might include internal
collection and charged off or default. Charged off means that the creditor
has given up on collections and has written it off.
Public
Records
This
section is the part you want to be completely blank. It doesn't list arrests
and criminal activities - just financial-related data such as bankruptcies,
judgments and tax liens. Those are the monsters that will trash your credit
faster than anything.
The
final section is the inquiries
That's
a list of everyone who asked to see your credit report. Inquiries are divided
into two parts: "Hard" inquiries are ones you initiate by filling
out a credit application or taking you child to the orthodontist. "Soft"
inquiries are form companies that want to send out promotional information
to a pre-qualified group of current creditors who are monitoring your account.
If you run around and apply for lots of credit, it will most likely result
in many inquiries showing on your report. This concerns creditors and they
may assume that the inquiries are negative because you weren't issued credit.
How
is my credit rating determined?
You
don't actually have one credit rating on the report as such. Each bureau collects
information it receives from the credit granting community: banks finance
companies, department stores, taxing authorities, landlords, and other credit
grantors. It is basically a sorted file of information furnished by the companies
you have done business with. It will show your open accounts, with balances
and credit limits; whether you pay them on time or not; whether any of them
are or were turned over for collection; any suits, judgments or tax liens,
and so on. Sometimes it can even include a spouse's name, social security
number, employer and income, and whether or not you own or rent your home.
It is an indication of how well you pay back your bills. It shows whether
you pay on time, and in full. It will show late payments and missed payments
too.
What
might be referred to as a "rating" is a credit score. This is a
complex calculation, which helps the creditor understand the chance of default.
It does not automatically mean "yes" or "no" to credit.
Creditors decide whether to grant credit, provide a credit card or loan based
on their own criteria and the history they see on the report, and what products
they have to offer.
Fair
Isaac and Co. is the creator of the FICO score, which is used to determine
a person's credit risk. The FICO score is composed of the following:
Your
payment history
·
How long have you established your credit?
·
How new is your credit and are you taking
on more?
·
Your total credit limits to see how much credit
you could get if you charged all your accounts up and took off with the money.
·
What types of credit do you have and is it
a healthy mix?
When
you've been turned down
A creditor may make the decision to turn you down for credit based on a variety of reasons. If this happens you may request a copy of your report within 60 days of being turned down for free