Obtaining a credit report is an excellent way to begin to take control of your financial future. You should review your credit report once a year, not only to be aware of their position with creditors, but also keep abreast of errors and fraud. However, once it gets the report may have difficulty making sense. How do you 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 reporting agencies as the most likely to contain information from different creditors subscribe to the agencies on a purely voluntary basis. The provision of reports submitted by each of the different agencies can present somewhat differently, but overall the information is broken down in the same way. There are four main parts of the credit report: personal profile, credit history, public records and question. Check each section carefully for errors. Please note any errors that may discover on a sheet of paper and reads the report.

Personal Profile

At the top of your credit report you will find all the basic information such as your full name, current address and previous employers, social security number and birth date. The name of your spouse may also appear if applicable. In addition, you may notice some variations of his name in the list. 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 to possible identity theft.

Credit History

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

There will be a column to identify the nature of the account; mixed, single, non-designated, authorized user, complete, Maker, co-signer or Shared. There will also be a notation of the date when the account was opened, the number of months the payment history of the account is reported and the date of last activity. The report will show your high credit limit or the maximum amount you are allowed to borrow, if necessary. There is a column for Terms which indicates the number of installments or monthly payments remaining in your account.

Subsequent columns will display the account balance, past due amounts, and account status. There are two types of accounts, payment and renewables. An installment account means that there are fixed payments and a specific end date, as with a car loan. Lines of credit is one with no fixed end date as with credit card debt. Creditors like to see some renewable debts. The credit report shows the different types of accounts and also can assign a numerical grading system. You can see such symbols as R1, R2, R3 or I1, I2, R or I indicates I3.The Revolving or delivery, and the numbers indicate the payment history of the account as follows;

The credit report also provides a record of all debts that have been handed over to a collection agency. It will show the date of the meeting were reported, the name of the company handling the collections and the company or lender that the loan was originally issued and the account balance.

Public Records

These reports are obtained from local, state and federal courts. It shows the bankruptcy records, tax liens and monetary judgments. Arrears of child records can also be shown. These public records will remain part of your credit history for seven to ten years and reflect negatively on your total credit score.

Research Section

This section reveals any parties that have obtained a copy of your credit report for the past two years. There are generally two types of queries, hard and soft. A hard inquiry is initiated by you when you apply for a loan or complete a credit application. A soft inquiry comes in three forms, companies wishing to offer their applications for promotion of credit, current creditors that are monitoring your account or credit bureau consultations requested by you, the consumer. These consultations do not appear soft on credit reports that businesses receive, only on copies provided to you. Although many lenders see too many inquiries on your report as negative, is important to note that two or more "hard" asks within 14 days counted as one inquiry.

Credit Score

The credit report can also reveal your credit score. A credit rating scores is a way of calculating the credit risk of an individual to determine the likelihood that they can enforce a loan. The score is a three digit number ranging between 300 and 850. The higher the score, the better it reflects on you as a borrower. A good credit rating score will enable you to negotiate better interest rates.

Controversies

What if you should find an error on your credit report? Once you've discovered an error, contact the credit bureau that issued the credit report and declare in writing what turned out to be inaccurate. You will find contact information listed at the top of your credit report.

The credit reporting companies must reinvestigate the complaint within 30 days. Then will contact the party who introduced the item and attempt to resolve the dispute as quickly as possible. Remember, you are entitled under the Fair Credit Reporting Act to dispute any inaccurate or fraudulent information that may appear on your credit report, and must do so in a timely manner.

Once they learn to read and understand a credit report, they are moving toward a more secure financial future. Get your report today!