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A Brief into Credit Reports and How to Understand Them

By Janet Lacey
Published: Monday, October 22nd, 2012

Analysing and fixing your credit score on your own requires ample knowledge. A credit report will provide a detailed description of the areas that has to be fixed. But there are many impending problems because not everybody understands the credit report. For those who are serious about correcting the credit score approaching a professional credit counsellor would be the right way to go ahead.

In general, a professional counsellor will get credit reports from 3 bureaus; Equifax, Experian, and the Trans union. The 1st step would be to compare the credit reports and check for discrepancies. If there are any discrepancies found a formal dispute letter will be sent to the credit bureau, highlighting the inaccuracy and the next step would be taken. For those still reluctant to hire a professional, here is a brief into understanding the credit report.

The report is usually separated into 5 major parts; personal ID, credit history, enquiries section, collections account and courthouse record. Below is a brief into all

Personal ID: This part has all details pertaining to your personal identification like name, DOB, address, Social Security number, contact numbers and other governments issued ID numbers like passport, et cetera.

Credit history: this part of the credit report reflects all the open lines of credit. It lists loans, credit cards, bank accounts. Further, the credit history also reflects all those accounts, loans or credit cards that have been closed. It will be detailed right from the day the account was opened till the day it was closed. It will also show if there were any late payments and it will reflect how late it was in 30 day increments; 30 day reflecting a month. For example; if the payment was paid 5 days late, then chain will show 35 instead of 00.

Enquiries: if you are on a shopping spree for loans or credit cards, it will reflect in this section. It is not advisable to apply at multiple banks at the same time as the day the negative impact. Especially if you are looking to repair your credit score, multiple inquiries should be avoided.

Collection accounts: delinquent accounts that have been assigned to collection agencies will be listed here with all details. The higher the number of delinquent accounts more less the score would be.

Courthouse record: this section will contain all legal aspects like court-orders, law suits, tax liens.

Understanding the Score: Fair Isaac Corporation or called the FICO score is fairly easy to understand. Based on all the above-mentioned criteria the score is derived. Anything above 750 is considered excellent, and these customers are termed as non-risky. Any score between 720 and 750 is considered good. Scores between 660 and 620 are considered uncertain and the banks will be cautious about lending to these people. Any score less than 620 are considered risky and no one will take the risk of lending money.

Except for those who have an excellent score others have scope for increasing the score. Especially, those who are considered risky will not get a loan unless and until your credit report is repaired.

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