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Understanding Your Credit Report Better

By Janet Lacey
Published: Saturday, July 10th, 2010

Most of us know all about credit scores and credit reports, but many of us still don’t understand how it works and what it is useful for. If you understand the different aspects of a credit report, it is possible to know what the right practices are how one can try and abstain from doing anything that might result in a poor credit score or potentially something along those lines. You need to know the value of such a report so that you can possibly understand how to manage your finances so that your creditworthiness is not affected.

Getting the report

You don’t have to pay a substantial amount of money t get your credit report. In fact, you are entitled to getting one per year at no rate whatsoever. You need to contact the annual credit report request service in order to get a free copy of your report. There are cases where you might want to get more than one report per year and you need to have a special request for this to happen. But, one per year should serve your purpose just fine.

Understanding the codes on the report

Each of these reports has a plethora of codes in the report, which you need to understand in order to completely comprehend the report. Usually, there should be a key or legend included in the report using which it is quite possible to understand how to decipher the report. In case you are not able to understand the report even with this information, you might want to seek help from someone you can trust and make sure that you get the real meaning of the report and if there is something that you need to be aware of. Don’t show the report to just about anyone, as the information it contains can be used to get you into trouble if they decide to do so.

Inquiries on your report

Every time your credit score is accessed by someone for a legitimate reason, there will be an inquiry posted on your credit score. You should know that these inquiries are completely logical and that it is normal to have some of them on your report, especially if you have requested for credit cards recently. However, one thing that you should know is that if there are too many inquiries on your credit score, you might not get approved for the card as the lender can simply cite excess inquiries and turn down your application.

Charge offs and Bankruptcies

When you have either of these in your credit report, it is bound to be a bad thing as this shows you in very poor light. Hence, try to avoid getting either of these in the report. Charge offs are usually present in your report if the credit company decides that some debt you owe them is not worth pursuing and is simply marked as irrecoverable assets. Hence, instead of spending money on lawyers, they will just mark it on your report so that other lenders are aware of it.

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