Over the last few years, there has been much attention brought to telling consumers how important it is to know what is on their credit before they need to have it pulled. This is very true, however, most of us don't have any idea how to read and understand all the information that is on a credit report.
For example, every credit report includes a list of "reason codes" with numbers and a short explanation of what the number means. Unfortunately, without fully understanding what those mean, it really doesn't do you any good.
Let's say that your credit report listed a "reason code" of "42". The short explanation might say, "The date you opened your newest bankcard or revolving account is too recent." So, what does that mean?
Well, I will share with you a website that allows you to type in the "reason code number," and it will not only give you the details of what it really means, but also suggest what you can do to improve your credit score!
Again, back to reason code #42 - Here are the long explanation comments:
Bankcard accounts include credit cards and charge cards from a bank and are frequently revolving accounts. Revolving accounts allow you to carry a balance and your monthly payment will vary, based on the amount of your balance. The bankcard or revolving account that you opened most recently is still too new. A credit file containing older accounts will have a positive impact on your credit score because it demonstrates that you are experienced managing credit.
Here's their advice on what to do to better your score:
Don't open more accounts than you actually need. Research shows that new accounts indicate greater risk, especially if overall account history isn't long. Your score will benefit as your accounts get older.
The website is www.ReasonCode.org. It has videos, FAQ's and other links where you can type in the reason code and the explanations appear.
Please feel free to contact me if you'd like my help in explaining "reason codes" on your credit report. I can also offer advice on what to do to increase your credit scores.