Okay, so you've ordered your credit report. You eagerly await its arrival. When you see the envelope marked Experian, you rip it open only to find what looks to be a bunch of numbers. How do you understand the information provided?
Each of the Credit Reporting Agencies (CRA) will have a report that looks slightly different. The basic information is the same however. Each report will have subject information that will list your name, social security number, current address, previous address, current employment, previous employment, date of birth and spouse's name (if applicable). Your job is to make sure all the information is correct. This is important because if you have been on your job for ten years you want creditors to know. This shows stability. If information is missing or incorrect make sure you follow the CRA's procedure for disputing incorrect information.
The next section will be a summary of your file. It will tell if you declared bankruptcy or have public records or collection items. It will also show what date your file was established and the latest reporting date of trade. It will also break down the amount of high credit you have in your revolving and installment accounts and how much you owe on these. Installment loans are loans with a fixed payment and ending date, such as a car loan or bank loan. Revolving debts are debts that usually have no fixed ending dates, such as credit cards. You can usually add more debt to these accounts as you pay them down. High credit is the amount of money that you can borrow. The owed amount is the amount that you have actually borrowed. For instance, you might have a $5000 credit limit (high credit) on your Visa, but you may have only borrowed $1500. Creditors like to see few revolving debts. Installment debts are better in the long run because you pay lower interest over the long haul. We will discuss why this is so in a later article.
Another area of your credit report is your inquiry history. Believe it or not, this area is important to creditors. They look to see if you have applied anywhere else in the last few days. Most creditors will then call the companies that made those inquiries and ask if you opened a loan with them. Also, they will be looking to see if you are an indiscriminate borrower. Let's say that you have 10 new inquiries on your credit report and six are from department stores and credit cards. To a creditor it looks as if you are going wild, borrowing from everyone in sight. This is not good! You might be able to pay your existing bills fine, but how does the creditor know that you can handle all of this new debt? They can't and most likely you will be denied.
Comments(1)