There are a number of areas in your credit report that you need to understand if you want to improve you credit score. Each section is covered to provide an overview of the areas most important in determining your credit score and getting you access to credit.
Personal information.
The easiest and first thing to correct on your credit report is dealing with old addresses and name variations. These two items serve no purpose on your credit report other than to hurt your credit profile. If a creditor needs this information, you can supply it when you need or must maintain credit.
To remove these items, call or write the CRA. Ask to have them removed, since they are “not accurate”. (Sample walkthrough for writing a credit report dispute letter.)
Public Records.
This is a tricky and persistent issue for your credit report. This information often passes through many people between the courthouse and the credit reporting agency. This “public” information is very prone to errors due to all the people using, recording, and transmitting it.
Public records can be disputed just like anything else on your credit report. Be very careful when sending documentation to “correct” your credit report in this case. You may inadvertently verify information. This makes dispute nearly impossible later.
Credit Information.
This is the area where negative credit items appear. This section outlines your credit worthiness, with regard to your history of handling past obligations. In some sense, this is the heart of the credit report.
Credit Items.
While the amount of credit you have, your existing loans, and inquiries make a difference, it is your actual reported credit behavior that is key to any credit decision.
- Date of Last Activity.
- Date Last Reported.
- Account Type: R - ”revolving” and I – “installment”
The date used to start the 7-year reporting clock.
The last date the creditor supplied an update to the credit reporting agency (CRA). This does not affect the reporting period or statute-of-limitations (SOL).
0 – Too new to rate
1 – Pays account as agreed
2 – No more than two payments past due
3 – No more than three payments past due
4 – No more than four payments past due
5 – Payments are 120 days or more past due
7 – Regular payments made under W.E.P (wage earner plan)
8 – Repossession
9 – Bad Debt; moved to collections; skip
Limit/Original Amount.
With installment loans, this is the original loan amount.
With revolving accounts, it is your credit limit.
These are used to determine your credit utilization rate. If your credit report shows an inaccurate low rate, it negatively affects your score.
Balance.
The total amount due as of the date reported.
Open/Closed.
This sections shows accounts as open, active, availaible for use, or
closed and no longer available.
Closed by Consumer means the account was closed at your request. It does not affect your credit score.
Closed By Credit Grantor shows the account as closed by the creditor, and often involuntarily. This is almost never good for your credit score.
Inquiries.
These are listed by date. It lists who has pulled your credit report.
Specific reasons must be met before anyone can see your report. “Permissable Purpose” are the legal requirements necessary to do so. A credit inquiry made without a ”permissable Purpose” to do so, is a violation of Federal Law. The violator is subject to fines of $1,000, and more in certain states.
Credit Report Item Life.
Bankruptcies stay on your credit report for 10 years. It begins from the date it is discharged.
Other negative items stay a maximum of 7 years from the date of first delinquency.
Positive items can appear indefinitely, and at a minimum of 10 years.
Credit inquiries appear for 2 years. Those in the most recent 6 month period are usually given the greatest consideration.
Getting A Credit Score.
When you get a credit report, you often get a credit score too. Sometimes it is free and sometimes it is available for an extra charge.
2 Types of Scores.
The FICO score (Fair-Isaac) is sometimes called the “Beacon” score. It is determined by the Fair Isaac Company using the data from your credit report.
Each credit reporting agency (CRA) has their own “score” calculated from their own credit report information. They vary in accuracy, and should never be used as an accurate indicator of your credit score. Only the FICO score is used by potential creditors. Do not be surprised if these CRA-specific scores differ from your FICO score by 100 points or more.
Equifax uses the Beacon score and should provide an accurate representation of your current credit profile, as seen by potential creditors. For Experian, they offer Fico scores through www.myfico.com.
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