In my previous article I addressed the importance of those wanting to rebuild their credit, on their own, examining their credit report to find what areas are affecting their credit score.
When a consumer hires a counselor to fix their credit, the counselors pull your report from the big three credit bureaus, Trans Union, Equifax, and Experian, to look for discrepancies and then write a formal dispute letter to have any inaccurate or outdated information removed.
The reason most people hire a professional credit counselor is because credit reports can be very difficult to understand.
In this article I'm hoping to break down what is in a credit report so readers know what to look for.
A credit report has five primary sections: Personal ID Section This section lists all of your personal info like your name, address, date of birth and social security number.
It will also list your employment information.
Credit History This is the most vital section of your report.
This is where all of your open lines of credit, also referred to as Trade Lines, such as Installment credit lines (mortgage or car payments) or Revolving credit lines like credit cards or retail accounts are listed.
Accounts that have been closed will also be listed here.
Each account listed under your Credit History will identify the date the account was opened,the original and existing balance and whether the account is paid as agreed or paid late.
It will also identify how late the account was paid in thirty day increments (30, 60, 90 or 120 days).
Obviously, later your payments are made the more it impacts your credit score.
Inquiry Section Here any and all companies that ran your credit within the past 24 months will be listed.
Multiple inquiries hurt your score.
They show a pattern of you being rejected for credit especially when the inquirers are from the same type of creditors.
To avoid accumulating multiple inquiries, I advise customers who are going to be shopping for credit to have a copy of their credit report with them.
This eliminates the need for a creditor to run your credit and add yet another inquiry to your profile.
If you are trying to repair your credit you must avoid accumulating multiple new inquiries.
They're horrible for your credit score and stay on your report for two years.
Collection Accounts This section is where any accounts that have been assigned to a collection agency will be listed.
Entries listed here will identify the creditor, the original amount of the debt and the delinquent amount owed.
Courthouse Record Section In this section, also known as the Public Records section, any civil lawsuits filed against you in local, state or federal court will be listed as well as any bankruptcy filings, tax liens or any judgments against you.
One important area of the credit report that many people fail to take advantage of is the consumer statement in their report.
This section allows you to make a brief statement to explain any derogatory entries on your report.
For instance if you lost your job, or were off sick, and your bills fell behind as a result, the consumer statement will allow you to give an explanation of what happened.
In an instance where a creditor can exercise discretion, your consumer statement might tip the scales in your favor.
Lastly your FICO Score (Fair Isaac Corporation) will be listed: a 750 or higher score is considered excellent; 720 or more is considered very good; 620 to 660 is uncertain and less than 620 is considered risky.
For people interested in rebuilding their credit on their own I recommend the tools offered at http://www.
creditcures.
us.
The package is less than $40.
00 and gives the do-it-yourselfer everything they need to rebuild their credit profile; from how to challenge and remove discrepancies in their credit reports to reorganizing their finances to avoid further credit problems in the future.
When a consumer hires a counselor to fix their credit, the counselors pull your report from the big three credit bureaus, Trans Union, Equifax, and Experian, to look for discrepancies and then write a formal dispute letter to have any inaccurate or outdated information removed.
The reason most people hire a professional credit counselor is because credit reports can be very difficult to understand.
In this article I'm hoping to break down what is in a credit report so readers know what to look for.
A credit report has five primary sections: Personal ID Section This section lists all of your personal info like your name, address, date of birth and social security number.
It will also list your employment information.
Credit History This is the most vital section of your report.
This is where all of your open lines of credit, also referred to as Trade Lines, such as Installment credit lines (mortgage or car payments) or Revolving credit lines like credit cards or retail accounts are listed.
Accounts that have been closed will also be listed here.
Each account listed under your Credit History will identify the date the account was opened,the original and existing balance and whether the account is paid as agreed or paid late.
It will also identify how late the account was paid in thirty day increments (30, 60, 90 or 120 days).
Obviously, later your payments are made the more it impacts your credit score.
Inquiry Section Here any and all companies that ran your credit within the past 24 months will be listed.
Multiple inquiries hurt your score.
They show a pattern of you being rejected for credit especially when the inquirers are from the same type of creditors.
To avoid accumulating multiple inquiries, I advise customers who are going to be shopping for credit to have a copy of their credit report with them.
This eliminates the need for a creditor to run your credit and add yet another inquiry to your profile.
If you are trying to repair your credit you must avoid accumulating multiple new inquiries.
They're horrible for your credit score and stay on your report for two years.
Collection Accounts This section is where any accounts that have been assigned to a collection agency will be listed.
Entries listed here will identify the creditor, the original amount of the debt and the delinquent amount owed.
Courthouse Record Section In this section, also known as the Public Records section, any civil lawsuits filed against you in local, state or federal court will be listed as well as any bankruptcy filings, tax liens or any judgments against you.
One important area of the credit report that many people fail to take advantage of is the consumer statement in their report.
This section allows you to make a brief statement to explain any derogatory entries on your report.
For instance if you lost your job, or were off sick, and your bills fell behind as a result, the consumer statement will allow you to give an explanation of what happened.
In an instance where a creditor can exercise discretion, your consumer statement might tip the scales in your favor.
Lastly your FICO Score (Fair Isaac Corporation) will be listed: a 750 or higher score is considered excellent; 720 or more is considered very good; 620 to 660 is uncertain and less than 620 is considered risky.
For people interested in rebuilding their credit on their own I recommend the tools offered at http://www.
creditcures.
us.
The package is less than $40.
00 and gives the do-it-yourselfer everything they need to rebuild their credit profile; from how to challenge and remove discrepancies in their credit reports to reorganizing their finances to avoid further credit problems in the future.