The Anatomy of a Credit Report

How to Understand Your Credit ReportMaxine Sweet is vice president of Experian North America’s Public Education organization and leads Experian’s consumer education, community involvement and corporate responsibility teams. She writes for the Experian news blog.

The first time you view your credit report it might seem a bit overwhelming. It’s a financial report card detailing how you’ve managed credit accounts over time. Because it often contains a significant amount of information, you might not be sure where to begin reading (or which information to pay attention to).

To help you out, here’s a complete breakdown of how to understand your credit report and everything you’ll find in it:

Credit Report Number & Index

At the top of your personal Experian credit report, you’ll find your credit report number. This report number is important because it’s what you’ll need when calling with questions or need to dispute an item.  You’ll also find a unique phone number assigned to you that you can call if you have any other questions. You will only find this information on your personal credit report when you request it directly from Experian.

Credit Report Number and Index

The credit report index is hyperlinked on top of your report so you can quickly navigate to whatever section you want to view quickly. The index will help you find potentially negative items, accounts in good standing, what companies requested your credit history, and much more.

Potentially Negative Items

Experian credit reports begin with a list of potentially negative factors on your credit report. This section lists items that lenders would likely view as negative and will include missed payments, unpaid tax liens, judgments, unpaid fines, and other debts that hurt your credit score.

Potentially Negative Items

This credit report section can help you identify what items you need to address first to begin improving your credit history.

Credit Account Info & Status

Each credit account listed in your report includes an account number, creditor name, address, a phone number when available, the current reported balance, recent payment info, and the status of account.

Credit Account Info and Status

Each credit account has a status that indicates whether it is paid in full, closed or open. The status will also indicate whether the payments are current or late and will describe the payment history. For example the account status could show the payments are now current were 30 days late in the past. Late payments in an account history will always hurt credit scores.

Accounts in Good Standing

After reviewing the negative items, there is a list of all the accounts reported to Experian that have no negative payment history.  These credit accounts will stay on your credit report as long as they are open. If closed, the account will continue to appear on your report for 10 years.

Accounts in Good Standing

Open credit accounts in good standing are helping you build a positive credit history, which can improve your credit scores. Some people close old credit accounts because they don’t want them anymore; however, you should be cautious about closing accounts. Closing good accounts can impact your score negatively because you will lose the available credit on the account, which makes it appear your existing balances are a greater proportion of your total credit limits, which is a sign of risk.

Type of Accounts

Each account lists a credit type, which helps identify the account as a charge card, installment loan, revolving account, or other type of credit line. This is important when learning how to understand your credit report.

Type of Accounts

Request for Your Credit History

This section lists every business that has pulled your credit report.  Requests for your credit report are called “inquiries.” Your credit report lists every inquiry made during the past two years.

There are two types of credit inquiries:

  • Inquiries resulting from a transaction initiated by you (e.g. your applications for credit, housing, or other loans).
  • Inquiries resulting from transactions you didn’t initiate (e.g. preapproved offers, investment review, account monitoring by existing creditors) or disclosures having no impact on your credit risk (e.g. employment, insurance, and when you request your own report.)

Request for Your Credit History

By law, businesses are allowed to view personal credit histories to help assess the risk of lending to an individual and recent inquiries showing you have possibly initiated new financial obligations are included in that assessment. Inquiries resulting from transactions you didn’t initiate or which have no impact on your creditworthiness cannot be viewed by others and do not hurt your credit scores.  You have a right to know what businesses viewed your credit report.

Personal Information & Address

At the end of your credit report, you’ll find all the identifying information associated with your credit history as reported to Experian.  Identifying information includes your current address and previous addresses.  Any variations in your name, street address or Social Security number reported to Experian will be listed.

Personal Information and Address

Providing complete, accurate and consistent identification on credit forms helps set up your credit history correctly and minimizes the chance that your credit file will be incomplete or mixed with another consumer’s file.

Credit Report Resources

As you can see, a credit report simply provides financial insight into how you’ve used credit and managed debt. Credit reports do not disclose medical information, criminal background, academic degrees, income, or assets. Hopefully the information above has helped you learn how to understand your credit report better.

Under federal law, you are entitled to get a copy of your credit report every 12-months for free. You can get your free credit report from Experian, TransUnion, and Equifax at AnnualCreditReport.com or by calling 1-877-322-8228.

Image credit: franckito

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