Understanding Your Credit Report

by Charlotte Wood
(last updated August 18, 2017)

I've always found official documents like W2s and tax return forms to be a bit confusing; credit reports fall into this category. What do all the numbers mean? How can you decipher what means what in that maze of digits and fill-in-the-blank lines? Once outlined, credit reports aren't nearly as difficult to comprehend and once you know how, you'll have a leg up on establishing good credit.

The pivotal part of your whole credit report is your FICO score; the higher your score, the better interest rates and credit deals you receive. If it's too low then you're in jeopardy of being rejected from an apartment contract, turned down from a job, and having your credit card cancelled. Many people (including lenders, landlords, and employers) use your FICO score to get a good idea for what kind of financial person you are.

The exact format of a credit report will vary, depending on which credit reporting agency put together the report for you. The first section of your credit report typically contains all your personal information, including your name, address, employment history, phone number, birthday, and Social Security number, among a few other bits of information. If you use the same information (e.g. your same full name) on all your applications, then that could save a lot of time when figuring out and reconciling your credit report.

The second section of most credit reports contains information that's available to the public like court records (e.g. divorce proceedings), foreclosures, and bankruptcy. The third section is probably what will catch your eye the most because it contains all your credit payment information. It won't reflect your on-time payments, but it does report on your mistakes and delinquencies. If you have a relatively empty credit payment section, then you're probably in pretty good shape.

The fourth section usually contains information on all the people or organizations that have inquired into your credit rating (e.g. credit card companies and banks). This is interesting because it gives others a good idea of who needs to know this information about you. You want this list to be on the shorter side because if you have too many then others could wonder why you're interested in accruing so much debt.

All of this information is compiled to produce your credit score and that is in turn used to determine a lot of your other financial situations (for example,. mortgages and car loans). Now that you know what exactly is in your credit report can you better understand how to make sense of it and do what you can to increase your all-important FICO score.

Author Bio

Charlotte Wood


Choosing a Spa or Resort

Spas and resorts can be great ways to get away from life for a moment and just relax for you. If you want the most ...

Discover More

Tasty Low-Calorie Desserts

Just because you decide to eat a low calorie diet doesn't mean you can't have desserts. Here are a few ways to spice up ...

Discover More

How to Remove Cellulite

Who likes cellulite? It's never considered too attractive, and many people wish to remove their cellulite. If you are ...

Discover More
More Money Tips

Using Credit Wisely

Credit is quickly becoming a staple of mainstream society. It is a tool that can either build up your financial situation ...

Discover More

Credit Counseling Agencies

Credit counseling agencies can be a great benefit to you and your financial path, especially if you don't exactly know ...

Discover More

Recognizing Credit Counseling Scams

Credit counseling is a useful credit tool that can get you well on your way to a stable financial score, however you do ...

Discover More

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] (all 7 characters, in the sequence shown) in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 6Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is one more than 4?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)