How to Read Your Credit Report

Last week, I told you how to identify a true credit score. Today, I will be telling you what is on your credit report.

Your credit report is a reflection of your financial life Which credit accounts you have, how much credit you have available to use, how you have used, how you make your payments, and any other information that is relevant.

If you have a credit card (notice, I didn’t say debit card) with a bank, this is what it might say:

(Your name) has a credit card with ABC Bank with the account number xxxxxxx-xx and owes $1,248 with available credit of $5,000 The minimum payment is $45 The account was opened 11/02 and the payments are C, C, C, C, -, C

What does that mean? The letter C means that the account was made “current” each month, which means your payment was made on time The dash means no payment was due that month This is a great entry for anyone’s credit report.

Here is another example of an entry on a credit report:

John Doe has a credit card with ABC Bank with the account number xxxxxxx-xx and owes $4,559 with available credit of $5,000 The minimum payment is $65 The account was opened 11/09 and the payments are 2, 3, 3, 3

What does that mean? It means that John Doe is not paying his account on time A 2 means he was 60 days past due and a 3 means he was 90 days past due (A 1 would be 30 days past due.) Do you see the pattern?

John Doe will have a harder time getting another loan or credit card with good terms Credit reports weren’t created to help you and I, they were created to help creditors decide whether to lend someone money Yes, you can look at your credit report, but almost anyone you do business with can run a credit check on you as well That includes landlords, employers, banks, loan companies and insurance companies.

A great credit report entry can help you, but a late payment account can hurt you A history of late payments will tell businesses that you don’t pay your obligations in a timely manner This is definitely something that you want to avoid.

Next week, learn what’s not on your credit report.