How to read credit reports to spot red flags

Understand the content of your credit report. Check your credit report. Have you read your credit report? It seems that someone always recommends to study our credit report in depth.

But do you really know what this means? Do you even know how to read a credit report? If not, it is time to study so that you can understand your financial situation. The credit report that leads to the credit score determines the amount and interest rate you can borrow. This will affect your bulk purchases-houses, cars, boats, etc.

The first step is to understand the basics of credit report elements so that you can find red flags.

There are three main credit reporting agencies: Experian, fax with UnicomThese companies will track your loan status and your payment status. Based on this information, they released a three-digit score. You want to be higher than 670, possibly more than 700.Read more about What does your credit score mean.

How to read a credit report

You know why your credit report is important. But you may not know how to decipher the credit report itself.

So, let’s start here.

A credit report consists of five elements: personal information, credit history, credit inquiries, public records, and credit scores.

Generally, you should check your credit report for red flags or errors. These red flags may include misinformation (such as a wrong Social Security number) or fraudulent activity (such as a credit card issued in your name that you have never applied for). Incorrect data in your credit report can damage your financial reputation. A better understanding of your credit report-and what it should and shouldn’t be-can help you spot errors that may affect your financial health.

If you have been affected by incorrect information in your credit report, you are not alone.According to statistics, at least one in five people has at least one credit report that is incorrect A study conducted by the Federal Trade Commission.

View What a false accusation The credit report sent to the debt collector did the same for a woman’s credit report.

How does an incorrect credit score happen?

Your credit report may be useful when you apply for a loan, request an increase in your credit limit, or even apply for a new job. These are reports used by companies and institutions to verify your credit history and the ability to qualify for everything from loan to work.

So how did these errors happen in the first place? Some may be personal fault, while others point out that the amount of data processed by credit reporting agencies per month is chaotic.

There are more than 200 million credit files that need to be maintained in each overall situation, resulting in more than 1 billion data updates every month. According to the Brookings InstitutionWith so much data, it is no secret why the error occurred.

However, maintaining an accurate credit report falls on the shoulders of individuals. Ensuring that your credit report is correct will ensure you get the best bulk shopping loan interest rate and the best credit card interest rate.You can check your credit report every year Annual Credit free.

Elements of a credit report

Let’s break down the content of each credit report section and the red flags to look for:

Personal information

This is your basic information as a borrower. This information will include personal data such as your name, date of birth, address and your work in the past few years and your income. It is important to verify all this information, especially your employment and income information. Usually, this information will affect whether you are worthy of borrowing and repaying on time.

Red flags to look for: This is all about the basics here. Is your address correct? Is your last name spelled correctly? There are also opportunities for fraudulent activities here. Make sure that no one adds a statement to your credit report stating that the information about you is inaccurate.

Credit history and account

In this section of the credit report, you will find the “type” of the credit account you have. Generally speaking, they are divided into three categories: mortgages, auto loans and credit cards. It also includes the time, amount, arrears and payment history when you opened the account.

The account will appear as “good standing” or “negative”. This may seem simple and straightforward, but it’s still a good idea to check to make sure those accounts that are “in good standing” reflect accurate payment history.

Red flags to look for: Ensure that the payment is shown on the correct date and does not reflect late payment This will negatively affect your score. In fact, the credit history section of your report contributes to most of your credit score (more on this later.)

Credit inquiry

Whenever you apply for a credit line or loan, the lender will access your credit report, which is considered a “query” or “pull.” Some of these queries have a greater impact than others. Queries are usually classified as “hard” or “soft”.

When a creditor or lender accesses your report because you have applied for certain things, a deadlift will be performed. When creditors or lenders try to “pre-approve” your credit card or loan offer, there is usually a “soft” pull.

Red flags to look for: It’s always a good idea to see who is accessing your report. Hard inquiry, is it actually your request? If you see a company accessing your report, but you know that you have not contacted you, please be sure to contact the credit reporting agency and notify them of this activity. The good news is that you can see who is accessing your report, including the date of inquiry, the name of the creditor, and the type of business.

Public record

Did you know that not only credit and loan account information can be displayed in a credit report?

Public record information, including child support orders, tax liens, and bankruptcies, may appear on your credit report. This is because the credit reporting bureau can obtain public record information from state and local courts.

In addition, any debts that you have not paid will appear in your report and may become a judgment submitted to the court.

Red flags to look for: If you have a negative record such as a judgment or bankruptcy, please make sure that it does not remain in your report longer than required. For example, most negative or delinquent accounts can only be kept in your report for seven years. Be sure to set a reminder when to check your report to ensure that the negative information disappears in time.

Credit score

This is the fifth aspect of your credit report, and perhaps one of the most important. Each major credit reporting agency will determine its own score for you based on the various weighted elements of your report.

Generally speaking, the length of your credit history, payment history, arrears of each account, new queries and the type of credit account are used to determine your credit score.

Red flags to look for: If your score is lower than you expected, or if a significant change has occurred without any new accounts or changes to existing accounts, it is best to check your credit report for errors. This may be the first sign of a problem.

Contributor Nicole Hutcheon is a senior journalist whose work has appeared in Ebony Magazine, 83 Degrees Media, Tampa Bay Times, Richmond Times-Dispatch and Florida Designers Review.

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About the Author: Agnes Zang