How to Read a Credit Report

There are several organizations such as credit card companies, lenders, banks and financial institutions who provide people with loans and credit facilities to individuals, businesses, companies and partners. To estimate whether a particular borrower will be able to payback the loan or not, a system that is known as a credit report has come into being. Such a system is effective in estimating the 'credit worthiness' of a person. Credit reporting agencies are organizations that maintain credit related records of individuals. Such records are requested or purchased by lenders from the credit reporting agencies, when you apply for a loan or credit card. This report is the deciding factor for the loan's approval and also your interest rate. Hence it is absolutely essential for you to know how to read credit report scores on the credit history.

Anatomy of a Credit Report

A disappointing disclaimer that I have to put forth is that you can have more than one credit report, since there are more than one credit reporting agencies. Similarly, you can also have different credit scores, ratings and interest rates, since every credit reporting agency follows a different mathematical model to derive such figures. One thing that would never change is the credit history. While reading a credit report, one must always look out for any mistakes, and a mistake can cost you a lot of interest and, in many cases, you will also have to face negative effects of having a credit report. These are the facts that you must be watchful for while reading a credit report.

• The first page is for personal information. The personal information includes your name, address, employment status. The employment status also includes your partnerships, agencies and joint ventures. Your monthly remuneration from the current employer and your previous employers are also included. Note that wrong information, misleading facts and spelling mistakes must be corrected by notifying the reporting agency, as such information can have a negative effect.
• The second category that you will need to watch out for is the list of credit accounts that are currently in operation. This section will include, all revolving accounts (credit cards or accounts that have a monthly requisite fee), real estate loans and mortgage loans, installment accounts and other accounts. Apart from these facts you will also have inquiries made against you.
• The third part is that most important one as you will have to watch out for. This part contains a list of all accounts that you have opened. The creditors name, account number, type of account, nature of responsibility, monthly payments, opening date, reporting date, balance(how much you still owe), credit limits, payment status and payment history are the points covered under every account name and number. Make sure that every single word of this part is true as it greatly affects the interest rate of your new credits and loans.
• The next part is your public record, where you have all foreclosure charges, criminal records and bankruptcy records.
• The concluding part of your credit report contains information related to inquires made against your credit report. This is basically a record of lenders inquiring about your report.

It must be noted that one credit report can be availed once a year, by the consumer.

Credit Report Dispute

Your credit rating and credit score is calculated on the basis of the aforementioned information. It is thus important that all facts in your credit report are truthful and correct. A single small mistake can end in a disaster and you might have to suffer from negative effects such as high interest and charges, or straight forward denial. In order to ensure that the report is perfect, get one report printed per year. And if you find any false facts, instigate a proper credit report dispute as specified by the website of the credit reporting agency's website.

It is also necessary that you have a look at your credit reports from all prominent credit reporting agencies as there is a chance that you may find the information different in all credit reports and may have to initiate proceedings to have it corrected.