FIVE CREDIT REPORT CATEGORIES

If you are nervous about examining your credit reports you are not alone.  Many people shy away from actually pulling credit reports for fear of what they will find.  Like an ostrich that finally pulls its head out of the sand to look around you will feel better once you realize that examining these reports can only help you.  Outright mistakes are common. Correcting them will give you a sense of being in control. Many people find that something they expected to be there is not there at all.  The reports are not hard to understand.

Credit Bureaus Equally Important

No one credit bureau is more important than another. Each credit reporting bureau has five credit report categories.  Don’t play the guessing game. Some lenders will tell you which report they will pull if asked.  Some pull more than one. Mortgage providers pull all three for what is called a “Tri-Merge Report”.  The mortgage provider will use the middle of the 3 scores most of the time. Here are the five credit report categories categories used by Equifax, Experian and TransUnion:

• PERSONAL INFORMATION:  Included will be your full name(s), date of birth, current and former addresses, current and former places of employment and the last 4 digits of your social security number.  This category furnishes the material for a lot of those ”out of wallet” questions you were asked when you requested your annual credit reports. Mistakes in this category are common.  Employment history may be incomplete. Credit reporting agencies frequently only find out about new employment when the consumer applies for new credit. Jr’s and Sr’s, Miss, Mrs and Ms’s may be inconsistent.  You may be “John” on one document and “Jack” on another. Divorce or marriage may have resulted in a name change. Former addresses may be misspelled. Although these mistakes will not affect your credit score you may want to clear them up with a letter to the credit reporting agency.  This avoids confusion by lenders and others who access the report. Accurate old addresses can help ID you to prevent identity theft. They can also be used by snoops to find old neighbors who may or may not be friendly or prone to vicious gossip. Occasionally debt collectors may give up if they have only the old address making you more difficult to find.

• SUMMARY OF ACCOUNTS:  This category is the heart and soul of your credit report.  Included here is any information creditors have reported about your payment history on loans of all kinds such as credit cards, mortgages, auto loans and charge accounts.  On time and late payments are reported monthly. Collections and charge offs will be found here. Of particular interest with collections and charge offs are the “date of first delinquency” and the date on which the negative entry will be dropped and deleted because of age.  Late payments may be 30, 60, 90, 120 or more months late. Carefully compare the 3 reports against each other in this category.

• INQUIRIES:  Records of all your credit applications remain for 2 years.  Inquiries can be either “Soft” or “Hard”. Soft inquiries include those made by others without your permission as well as inquiries you make yourself.  Car dealers, lenders, insurance companies and your own credit card holders sometimes make soft inquiries in order to determine who to send special offers to.  You can opt out of this and stop soft inquiries if you wish. Soft inquiries have no negative effect on your credit score at all. A hard inquiry is recorded when you apply for credit.  Although hard inquiries are retained for 2 years on the reports FICO only counts them as a negative for 1 year. The number of inquiries on each report will vary because credit card issuers, landlords and employers usually only inquire of 1 or 2 credit bureaus.  A large number of unrelated inquiries in a short period of time will cause a sizable drop in your credit score

• PUBLIC RECORDS:  Any public records such as bankruptcies or repossessions that have been recorded against you will be listed here.  These items are very detrimental to your score. Judgments and tax liens are no longer reported due to recent tightening of requirements for verification of all negative entries by credit bureaus.  Most judgments do not have enough detailed identification information to be reliable enough to report. Older judgments and tax liens have been deleted by the credit reporting agencies.

• CONSUMER STATEMENTS:  You are allowed a written statement of up to 100 words if you feel the need to explain anything you don’t like or agree with in your file.  This statement will not help your credit score in any way. It is only worthwhile in the very rare instance when someone actually examines the file itself in detail.  Don’t make a consumer statement.  Banks don’t care what they say.  It can slow down processing of your mortgage application.

Five Credit Report Categories Say it All

You are now up to speed on the basic structure of credit reports.  There will be more detailed information relevant to this subject presented in the Essays ahead.    Seeing where you can improve is easier when you understand what the five credit report categories are for and where you fit in. Now its up to you to examine them objectively. Leave the wishful thinking behind and you will get where you need to be a lot faster.