A credit report can be confusing to those that aren’t used to reading them. They contain a lot of information about you and your borrowing history. It shows how you have used credit over time. Lenders use your credit report to understand how you handle all your debt. It helps lenders decide whether to approve your loan or not. It shows patterns and that can be important.
Many clients aren’t sure how to read a credit report. I will go over reports with clients when they are looking at homes. Sometimes it is to figure out how to increase a credit score or looking for issues and how to fix them. It’s important to review your report to make sure there aren’t any errors on your report. Over the years I have seen several different errors – some as serious as a social security number was typed incorrectly on a loan and now that loan is showing up on your credit report. Unfortunately that can be hard to fix and may definitely affect your ability to get a new loan. Others as simple as an address typed incorrectly.
What do you need to look at on your credit report? The first section is really just personal information. It lists your name, addresses and part of your social security number. It doesn’t affect your score but it can be a sign of identity theft if there are errors on it. The next section lists your credit accounts. It will show credit cards, car loans, student loans and any personal loans. Some landlords are starting to report to the credit bureaus. Each account shows whether it is open or closed and if there are late payments.
This section of your credit report is important. For revolving accounts, you will see the credit limit and current balances. It will show any late payments. It also shows how long accounts have been open. The payment history is one of the most important sections on your report. This is an area that you want to make sure is accurate.
There will be a section that shows credit inquiries. Typically you will only see hard inquiries on your report as they are the ones that are used when you apply for credit. A soft inquiry doesn’t usually show on the report and doesn’t affect your credit score. If you are concerned about identity theft, watching your credit inquiries can be helpful. It shows if someone is looking at your credit report.
Common errors on your credit report are accounts that aren’t yours, incorrect balances, old accounts that should be closed and payments marked late when you paid them on time. Signs of identity theft are new accounts that you do not recognize, inquiries you didn’t authorize and personal information that you never use. If you see any signs of identity theft, it’s important to report it right away.
Understanding your credit report can be the first step to homeownership. Paying your bills on time, keeping balances low and avoiding new debt can help you with your credit scores. There are a couple ways to get your credit report. Many people use websites like Credit Karma to view their credit report. You can also go to www.annualcreditreport.com and get a free copy of your credit report annually. It will not give you a score but it is an accurate copy of your credit report. It can be helpful to keep an eye on your report. When you review your report, feel free to reach out if you have any questions.
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
