How to Read Your Credit Report

By James Millen/Loan Manager at Communicating Arts Credit Union

DETROIT - Understanding how to read your credit report is necessary to insure there are no errors and to be sure that your financial history is accurate. Creditors report your payment history and inquiries to one or all of the three credit reporting bureaus: Transunion, Equifax and Experian. It is important to monitor all three bureaus since the information can be dramatically different from one Bureau to the next.

Personal Information
The first section on your credit report is identifying information. This will list your name, social security number, address and employers. If you changed your name, you need to notify all three credit bureaus so they are applying your credit history to the right report. When you pull your credit report, check over this section and make sure there are no errors. Notify the credit bureau in writing if they have any inaccurate information.

Credit History
This section will include all credit lines you have. The accounts will be listed individually with the account number, creditor name and the type of trade line: installment or revolving. Then the credit line and amount owed is listed. Every month your creditor gives this information on a certain date to the bureau. It may be at the month’s end, but it does not show an average daily balance, it shows the amount owed on the date the information is furnished. So you need to be careful to keep these balances low in order to keep your credit score high. It is recommended to keep balances below thirty percent of the limit. The payment history will also be listed. Each month, for as long as the credit line has been established, there will be a notation of whether the account was paid on time, thirty days late, sixty days late and so on. Remember, you have the right to dispute inaccurate information through written coorespondence with the credit bureau in question.

Public Record
A public record is an occurrence that is often filed in a court of law. Bankruptcy or tax liens are considered public records. They are very harmful to your credit and the public records section ideally should be blank. If you did have a public record, it usually remains for seven to ten years.
Inquiries

An inquiry is any time someone, other than yourself, pulls your credit report. There are two types of inquiries: hard inquiries and soft inquiries. A hard inquiry occurs when you apply for credit and the creditor needs to check your credit report. It could be a mortgage, credit card or department store card. Big ticket items often require shopping around for the best loan. The bureaus are aware of this and any inquiries made within thirty days of obtaining a mortgage, or fourteen days of buying a car, are not reported, This allows consumers to rate shop without being penalized. Other than those instances, it is harmful to have many hard inquiries on your report, since it seems you are always searching to obtain new credit. Soft inquiries are made by credit card companies who want to send you pre-approved offers. These are not harmful to your credit score.

What affects your credit score? The three main factors are: payment history, capacity to borrow (your approved limit compared to your current balance), and public records. Late payments, and maxed out cards are the enemies of good credit scores.

“It is important to stay ahead of the game when it comes to your credit report and credit score,” says Communicating Arts Credit Union President, Hank Hubbard. “Your credit history and score can determine what you pay for auto financing and leasing, credit cards, mortgages, and insurance. It can even affect whether or not you get a job or rent an apartment – it affects your everyday life!” Communicating Arts Credit Union offers free credit score enhancement to all members.

What can you do to be on top of what is happening with your credit? You can check your credit report for free annually by visiting www.annualcreditreport.com. Here you will receive information from the three main credit report bureaus: Transunion, Equifax and Experian. Disputes and corrections to your credit report can also be filed through this website.
For more information on reading your credit report or any banking inquiries, contact Communicating Arts Credit Union at (313) 965-8640 or visit, www.cacuonline.org.

James Millen is Loan Manager at Communicating Arts Credit Union