How to read your credit report
The x-ray of your credit health can be dense, so just look for these six items.
You have one shot of your credit reports. And now? As you’ve probably heard about now, you are entitled to free copies of your credit reports. Federal law gives you the right to request your credit reports from three, one from each of the three major credit reporting agencies each year.
You can get them at a time or throughout the year. Personal finance gurus often recommend taking a report every four months that you regularly monitor your records. Anyway, checking your credit reports is a smart move considering that the information in your credit report determines your credit score.
But once you get the report, what do you do with it? How about giving the treatment of six minutes? Then you definitely want to read the full report in detail, a quick check on a handful of indicators can give you an instant assessment of how good – or bad – your credit is right now.
Here are six markers that can provide an X-ray of your credit health.
Delinquencies are “enormous influence” on the credit score, said Stephen Brobeck, executive director of the Consumer Federation of America. In fact, they represent 35 percent of your FICO score.
If you see the ratings invoices were paid 30, 60, 90 or 120 end, “it is very damaging” to your credit, he said.
The other factor is important here: the timeline. How was the end of the payment, and how long you make this mistake?
Following payment, the more it hurts your credit, says Evan Hendricks, author of “Credit scores and credit reports. How the system actually works, that you can do”
But the more time that has elapsed since you made a late payment, the less it will affect your credit, he said.
Limit high ratios of debt to credit
Credit scores typically look at your debt-ratio limit credit or “use” in two ways: They compare the balance on a revolving account to your credit available from that lender. For example, if you have a credit card with a balance of $ 1,000 and a $ 5,000 credit limit, this ratio would be 20 percent.
Scoring formulas also look at your debt-credit limit ratio is a second way: the calculation of the total of all your debts on the accounts revolving lines of credit against your total of these accounts.
So if you have four credit cards each with a credit line of $ 5,000 ($ 20,000 in credit), and you have a balance of $ 1,000 on two of them and nothing on the other two ($ 2,000 debt), this ratio would be 10 percent.
“In an ideal world, you want to have (ratios) of less than 10 percent,” said Hendricks. “But certainly you want to keep them under 40 percent. There is no magic.”
But if you use a balance of $ 2,000 to $ 3,000 with a card that has a $ 5,000 limit, “which will really hurt your score,” said Brobeck. “And what is worse, running up balances on several cards.”
In most cases, if you have an account that went to collections or have been written off as bad debt, you know about this, said Rhonda Bailey, credit counselor and manager of the review of credit report for Credit Counseling Non-profit Arkansas. But not always.
“There are a few cases, as an old utility bill after you have moved, (where) the collection agency and not find (the consumer) has forgotten about it,” she said. “I see that sometimes.”
If you find an article that is not yours, you can dispute and have removed from your report.
If the item is yours, you have decisions to make, says Bailey. Can you afford?
It’s a good idea to check the law of your state of limitations, which is the period of time creditors have to sue you over a debt. Your state attorney general’s office can give you that time, she said.
Separate this time, the question may remain on your credit report for seven years. Plus it was on your report, unless it affects your score.
Judgments, liens, bankruptcies
Hopefully you know if you have had major financial difficulties that involved judgments, liens or bankruptcies. However, if someone else uses – and looting – your financial identity, a notation on your credit report could be your first clue.
Same if a collector less-than-scrupulous you marked with another debt or taken action against you without proper notification.
When you get this report, the digitization of “public records” section, explains Michelle Doshi, the editor of publications for the Consumers’ Association Credit Union National. “If there are liens or bankruptcies, it is a good way to check. ”
Active accounts you have closed – Or never opened
You close a store card after moving. Or you finally had time to ask your daughter to close the card account you have co-signed for her when she was in college.
The next time you pull your credit report, if enough time has passed, we must show that these accounts are closed, said Doshi.
Looking back on your credit report “is a way to verify that you have closed and their dates are correct,” she said. If this should be a closed account on your credit report open lists, it’s a good time to contact the issuer and find out why.
Another thing to watch is the accounts you do not remember opening the first place. The absence of a mix-up, which could be an “indication of identity theft,” says Doshi.
Your credit report will tell you who else has looked at my credit report. Called “investigations” into the credit-speak, they are of two types.
Applications are hard when you actually asked for new funding – has completed an application, signed documents, etc. – and asked a lender to verify your story. When you get a hard inquiry, your credit can take a slight decline. Hard inquires could affect your score for one year, but you will see on your report for two years.
Soft inquiries are what the credit bureaus put on your report when someone looks at your credit, but you did not request new loans. If you pull your own credit report, which is a soft inquiry. You’ll also see if a potential lender pulls your credit for marketing purposes. Applications software do not affect your score.
Applications are disks “such a small part of your credit score,” said Kelly Rogers, Chief Development Officer of the Consumer Credit Counseling Service a non-profit Orange County, California, and assistant professor at the University Chapman. “But that’s a great way to see if someone has used your information.”