Personal Credit: How to Read and Understand Credit Reports
Sally was going through a rough time with her financial situation two years ago. She was without a job for four months and had student loans to repay. Therefore, she ended up taking two personal loans. These loans helped her through for the next six months and her situation improved after she had a decent job. In two years, Sally repaid both personal loans in full and had a zero balance.
Little did she know that her credit score was still stuck at a low 600? Sally checked her credit report over and over again. However, she could not figure out why her credit score was still not improving despite paying her personal loans off and had her credit cards paid down over 55%.
A credit report includes a variety of personal information related to person’s financial history, background, public records, and inquiries. Your personal credit report will have information from the three main credit bureaus: Equifax, TransUnion, and Experian.
What were the details she may have missed out on?
- Check for the kind of credit, you had: car loan, mortgage, personal loan, store credit, a revolving credit card, business loan.
- Carefully read the credit amounts: when was the loan issued, how much you were paying in installments, did you miss any payments, how much you still owe to each.
- Find out status of the accounts: active, inactive, paid, etc.
- Determine if there are any accounts associated with another person: for example, you may have an account open with your husband or wife and any other family members jointly.
- Make sure you have not miss a payment, determining how well you have been paying those accounts.
- Credit Inquiries: Check for the agencies or companies who have made a hard inquiry on your credit and if there are any errors.
The above six factors affect someone’s personal credit report highly. For example, if there is an error made on behalf of your credit card payments. 5. Maybe the credit card company forgot to report your payments to the credit bureaus. Keep track of your own details.
Three actions you may take to resolve errors on your credit reports:
- Call the credit bureau and ask them questions to find out about the particular detail.
- Call your creditor and figure out update on the certain detail.
- Check your credit regularly: There are services which allow you to obtain a free credit report.
Lastly, it will take 30-45 days typically to update the error on your credit report.
Some of the services you can use to check your credit without a hard inquiry are: Credit Karma, Privacy Guard, CreditCheckTotal, and Credit Sesame.