How To Read Your Credit Report

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"How To Read Your Credit Report"

Do you have a Real Estate question? Wondering about financing a property, personal finance, improving your credit , managing your debts, buying, selling, or real estate investment? Send your inquiry to The Mortgage Guru.

Article: "How To Read Your Credit Report"
By Andre Plessis

Credit Report Guide

Personal Profile
In this section you will find the personal information contained in your credit file, including your:

	Legal name(s)
	Other names associated with your credit file(s)
	Current & previous addresses
	Current & previous employers
	Date of birth
	Look for incorrect addresses or address changes that you did not authorize – these could be a sign that someone has stolen your identity and opened fraudulent accounts in your name, redirecting your mail to another address so that you don’t find out about it.

Credit Summary
This section gives you a broad look at your current and past credit status. Here you’ll find the total number of both open & closed accounts in your name, the total of all account balances, whether you have any delinquencies, & the number of inquiries that have been made to your credit file.

Types of Accounts:

	Real Estate Accounts = Mortgages & other property loans (primary & secondary)
	Installment Accounts = Accounts with set payment schedules
	Revolving Accounts = Credit cards & other accounts that allow you to make additional purchases without reapplying for a new loan
	Collection Accounts = Accounts that are seriously overdue & may have been turned over to a collection agent

Report Terms:

	Count = # of accounts in each category
	Balance ($) = the total of all outstanding balances on the accounts within that category
	Payment ($) = the sum of all current minimum payments due at the time your report was pulled
	Current = # of accounts that have been paid on time within that category
	Delinquent = # of accounts that are past due
	Other = all other accounts not included in the given categories
	Open Accounts = total # of accounts open in your name
	Closed Accounts = total # of accounts that have been terminated
	Public Records = # of federal district bankruptcy records, state & county court records, tax liens and monetary judgments in your name
	Inquiries = # of times your credit file has been requested by a creditor in the past 6 months

Public Records
This information comes from federal district bankruptcy records, wage items, state & county court records, tax liens and monetary judgments, and, in some states, overdue child support records.

Public records remain on your credit report for 7-10 years.

Report Terms:

	Type = type of public record (bankruptcy, tax lien, etc.)
	Date Filed = date your record was created
	Reference # = your record´s legal identifying number
	Court = the court that has legal jurisdiction over your record
	Plaintiff = the person or company listed in the legal judgment
	Liability = $ amount for which the court decided you are legally responsible
	Asset Amount = $ amount of total personal assets taken into account in making the court decision

Credit Inquiries
This section contains the names of those who have obtained a copy of your credit report.

Anytime your credit report is pulled – whether you apply for a loan and the lender requests a copy of your report, or you order a copy of your credit report yourself directly from the credit bureau – an inquiry is added to your report

There are 2 types of inquiries:

	Hard Inquiry = these are inquiries made by your creditors and lenders with whom you have applied for credit or a loan. When lenders order a copy of your credit report, they see only the inquiries made by other creditors and lenders with whom you applied for credit or a loan. Also, these are the only inquiries that are considered when calculating your credit rating and/or credit score.
	Soft Inquiry = these are made when you request your own copy of your report and/or when an employer checks out your credit history. Lenders and creditors do not see these inquiries when they pull your credit report; therefore, they do not use these inquiries to calculate your credit score and/or make loan decisions.

Try to limit the number of hard inquiries placed on your report – lenders often consider a high number of inquiries as a sign of financial difficulty.

Inquiries remain on your report for up to 2 years.

Look for hard inquiries from companies you are unfamiliar with or did not authorize to check your credit report; these could signify credit fraud.

NOTE: Your credit is not affected when you pull your credit report, because this is a soft inquiry.

Information is listed as follows:

	Name of the person or company making the inquiry
	Reason for the inquiry or company’s type of business
	Date your credit report was requested by the company

Account History
This section includes specific information on each account you’ve opened in the past.

	Positive information about your accounts remains on your report indefinitely.
	Check to see that all information is accurate & consistent.
	Look for accounts you don’t recognize – these could be accounts that were fraudulently opened in your name.

Account Two Year History Legend:

OK	Current	90	90 Days Late
ND	No Data Provided*	120	120 Days Late
30	30 Days Late	KD	Key Derogatory**
60	60 Days Late	RF	Repossession or Foreclosure
		PP	Payment Plan
Sometimes the credit bureaus do not have information from a particular month on file. * Claim, Term Default, Government Claim, Paid by Dealer, Bankruptcy Chapter 7, 11 or 12 Petitioned, or Discharged and Bankruptcy Chapter 7, 11, or 12 Reaffirmation of Debt Rescinded.

Report Terms:

	Account Number = your account number
	Acct Type = type of account (Installment, Revolving, Open, etc.)
	Acct Status = status of your account (Open or Closed)
	Monthly Payment = last reported minimum payment due to the creditor
	Date Open = date your account was opened
	Balance = last reported $ amount due on the account
	Terms = # of periodic payments scheduled for the length of the payment term
	High Balance = highest $ amount you have ever owed on the account
	Limit = maximum amount of credit you have been approved for on the account
	Past Due = $ amount overdue to date
	Comments = comments you or your creditor have recorded regarding the account
	Payment Status = additional comments regarding your payment history

Credit Score
Your Credit Score is a numerical representation of your credit risk on a scale very similar to those used by lenders. Your Credit Score is based on the information contained in your credit report.

Financial institutions often use credit scores to help determine your credit worthiness for credit card approvals, mortgage lending, setting insurance premiums, and much more. Your Credit Score is determined using many of the same factors considered by leading credit-scoring companies. To better understand these factors, please see your detailed score explanation. The higher your score, the better, since a higher score indicates you are less risky to lenders. By understanding your current level of credit risk, you will know what kinds of offers you can expect and avoid surprises when applying for a loan or credit card. By identifying the factors affecting your credit, you can learn to better manage your credit and get better loans.

Since there are 3 major credit bureaus in the US, you actually have 3 different credit reports. Each one is based on the information that lenders have reported to that individual bureau. In the same way, you have 3 different Credit Scores – each based on one of your credit reports. Because a lender can report your information to any of the bureaus (some lenders report to all 3 bureaus, while others may report to none or only 1), your credit report at each bureau often contains different information. If there are differences among your 3 credit reports, your 3 Credit Scores will reflect these differences, as well.

It is important to note that each of your Credit Scores will change over time, just as the information in each of your credit reports will change. In fact, your score can actually change from day to day, since it is based on the information in your credit report on the day your PLUS Score is calculated. We recommend periodically checking your PLUS Score, score details, and credit report in order to be aware of your total credit picture.

Different Ways to View Your Credit Score
Your Credit Score is a three-digit number that represents your credit worthiness. Using a scale widely accepted by the lending industry, the majority of Credit Scores are between 330 and 830. Higher scores are viewed as being a low credit risk while lower scores are viewed as being a high credit risk.

Credit Categories
Credit Categories provide an easy way for consumers to learn about their credit and understand what types of loan terms (such as interest rate, credit line, fees, etc.) they can expect when applying for credit. This snapshot of a consumer's credit is based on general industry guidelines. Although each lender has different criteria, you will most likely receive the best loans and terms if you fall in the "Excellent" category. If you fall in the "Very Poor" or "Poor" categories, you will probably receive less favorable loans and terms.

The Percentile Value
Your percentile ranking is computed using a distribution of PLUS Scores based on over one million credit reports and reflecting the natural distribution of the US population. This provides an easy way for you to compare your credit to the rest of the U.S. population's. For example, if you rank in the 90th percentile, your credit is higher than 89 percent of the U.S. population. The higher your percentile ranking is, the more likely you will be able to receive good loan terms.

Some statistics about the score distribution (percentiles):

	15% of the US population is below 575
	35% of the US population is below 675
	50% of the US population is below 724
	70% of the US population is below 757
	90% of the US population is below 778

Detailed Score Explanation
Your Credit Score is calculated using information from your credit report on the day it is calculated. It is based on multiple factors such as:

	Payment history - Information about the way you paid your credit accounts in the past, including late payments and bankruptcies.
	Credit accounts - The number of credit accounts that you have and the different types of those credit accounts (e.g. credit cards, auto loans, etc.).
	Credit usage - The amount of credit you are using, and the amount of credit still available.
	Length of credit history - The number of months your credit accounts have been on your credit report.
	Credit applications - The number of times you have applied for credit in the recent past.
	Bankruptcies - The presence and age of bankruptcy records (if any) on your credit report.

With many lenders using credit scoring as a significant part of their loan process, it is extremely important to know the reasons that make your score higher or lower. In fact, knowing the reasons behind your particular score is more important than knowing your score itself. This knowledge enables you to proactively manage your credit so you can get better loans.

The negative and positive factors listed on your Credit Score Report are based on actual data from YOUR credit report. By improving your negative areas and continuing your positive actions, you will be able to improve your credit rating.

Factors Not Used
Factors that are NOT used in calculating your Credit Score include age, sex, and race. These factors are excluded from credit scoring to eliminate bias and discrimination from the decision process. Only the information from your credit report is used to calculate your Credit Score.

Andre Plessis

Andre Plessis
"The Mortgage Guru"
"A Mortgage Professional whose primary goal is to provide the expertise, guidance and skills necessary to obtain the best mortgage to meet your personal needs".
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