Credit Information

Obtaining a credit report is an excellent way to begin taking control of your financial future. It's recommended that you review your credit report once a year, not only to be aware of your standing with creditors but to also keep abreast of errors and fraud. However, once your report arrives you may have trouble making sense of it. How are you to read and understand a credit report?

There are three major credit reporting agencies that issue credit bureau reports; Experian, TransUnion and Equifax. It is recommended that you obtain reports from all 3 credit report agencies as they most likely contain varying information since creditors subscribe to agencies on a purely voluntary basis. The credit reports provided by each of the different bureaus may present somewhat differently but generally speaking the information will be broken down in much the same way.

There are four main parts to the credit report: personal profile, credit history, public records and inquires. Check each section carefully for any errors. Note any errors you may discover on a separate piece of paper as you read over your report.

Personal Profile

At the top of the credit report you will find all your basic information such as your full name, current and previous addresses and employers, social security number, and date of birth. Your spouse's name may also appear if applicable. In addition, you may notice several variations of your name listed. This can occur when creditors record the information incorrectly. These discrepancies are usually left on your credit report. It is important however, to ensure that your address is correct. An incorrect address could alert you to a possible identity theft.

Credit History

The next section is your credit history. This provides you with an itemized list of your current active, past closed accounts and their balances or arrears. Listed first is the name of the creditor and your account number for each bill--sometimes the account numbers may appear partially obscured for security purposes. These debts could include real estate mortgages, credit cards, car loans, or medical bills.

There will be a column for identifying the nature of the account; Joint, Individual, Undesignated, Authorized User, Terminated, Maker, Co-signer or Shared. There will also be a notation of the date when the account was opened, number of months the account payment history has been reported and date of last activity. The report will show your high credit limit or the maximum you are allowed to borrow, if applicable. There is a column for Terms which indicates the number of instalments or monthly payments remaining on the account.

The next few columns will show the balance remaining on the account, any past due amounts and the status of the accounts. There are two types of accounts; instalment and revolving. An Instalment account means that there are fixed payments and a specific ending date, such as with a car loan. A revolving account is one with no fixed ending date as with credit card debts. Creditors like to see few revolving debts.

The credit report will indicate the different types of accounts and also may assign it a numerical ratings system. You may see such symbols as R1, R2, R3 or I1, I2, I3.The R or I indicates Revolving or Instalment and the numbers indicate the payment history of the account as follows;