4 Credit Report Sections You Can't Ignore
Some of life’s greatest milestones such as buying your first car or getting the keys to your family’s home typically require the help of financial assistance. Before you seek out an auto loan, mortgage, or other loan option, your first step should be to review your credit report. A quick credit report review can help you identify and fix errors that could result in a higher credit score. These few moments of your time can lead to an increased chance you’ll qualify for a loan and receive a lower loan interest rate saving you money.
Your credit report is an ongoing track record of your financial health which is monitored by the three major credit bureaus. Equifax, Experian, and TransUnion generate a FICO score that will serve as a predictive metric when lending professionals process your loan and credit card applications.
If it seems as if this process is out of your control, think again. You have a right to a free copy of your credit report every 12 months. By securing a copy and thoroughly reviewing the information used to arrive at your three-digit credit score, you will be able to take proactive measures. When you receive a copy of your credit report, there are four key sections to drill down on. Before we cover those areas, you must first understand how you can access your report.
How to Get Your Free Credit Report
Downloading credit score tracking apps and signing up on online platforms provides reminders and alerts regarding your credit score. But the most comprehensive way to address your score is to secure a digital or physical credit report document.
The Federal Trade Commission highlights three ways you can get a free copy of your credit report annually. Rather than visit the websites of Equifax, Experian, and TransUnion individually, the Annual Credit report Request Service streamlines the process. These are the three ways to get a free copy from each of the three credit report bureaus.
- Visit www.annualcreditreport.com and fill out the online forms.
- Call (877) 322-8228 and request the copies.
- Send a mail request to: Annual Credit report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Requesting the Annual Credit Report website remains the easiest way to get a copy. The platform is relatively self-explanatory and does not require a credit card or payment information of any kind.
4 Credit Report Sections You Can’t Ignore
All three credit bureaus use the same FICO metrics to calculate your credit score. The sometimes more than 30-page credit report you receive will have a three-digit summary score that may differ from the others. Although Equifax, Experian, and TransUnion all use the same system, the information they access may differ. And the time in which you request a copy could also fall at a different stage of their review process.
It’s not necessarily important to concern yourself with modestly different scores. But if they are significantly different or uncharacteristically lower than you anticipated, the details in these four sections will tell you why.
1: Personal Information Section
Credit report bureaus sometimes make seemingly minor errors that have a profound effect on your score. Incorrect addresses, Social Security numbers, birth dates, phone numbers, and work histories rank among the more prevalent mistakes. And don’t be surprised if your name is misspelled.
For example, a missing middle initial or incorrect maiden name could result in faulty or incomplete data being used to calculate your credit score. Although these and other personal information faux pas are usually harmless errors, some could be due to identity theft.
2: Accounts Section
Considered the meatiest portion of your credit report, this section lists all your financial accounts, not in collections status. Each listing should come with a summary that includes the account number, date opened, name and address of the creditor, as well as its status.
Along with the type of account, the information tells you whether the credit bureau believes it’s in good standing, has a balance due, and when the creditor transferred the information. This section is particularly important because errors and late reporting issues can hinder your score in two ways. Negative information can reduce a credit score in terms of repayment history metrics. And the higher balances also affect credit utilization percentages.
3: Negative Information Section
With any luck, the section is relatively brief. It covers the accounts that have not met the agreed-upon repayment terms. Items such as collections actions and bankruptcy filings appear in this section. Most negative information remains on your credit report for seven years. A Chapter 7 bankruptcy stays for 10 years. If something lingers, having that negative information removed can positively impact your credit score.
4: Inquiries On Your Credit Section
When considering a loan, line of credit, or new credit card, it’s important to remember that each application results in an inquiry. Application processors request credit report information to determine your creditworthiness. These “hard pulls” usually hurt credit scores for six months. By contrast, asking for your own credit report is considered a soft inquiry and does not generally affect your score. If you discover hard inquiries from beyond two years or unauthorized inquiries, further investigation may be warranted.
What To Do If You Find Errors
Errors, omissions, and unauthorized incidents can negatively affect your ability to borrow at the lowest possible rate. Bad credit scores also impact housing access, job opportunities, and have a financial impact on your budget. If you discover problems on your credit report, gather supporting documents to prove they are in error. Both the business that supplied the error as well as the credit bureau must correct the misinformation in your report. The dispute process for each credit bureau may differ slightly but typically includes sending a written explanation and copies of the supporting materials to the credit bureaus requesting a correction.
If your credit score has been damaged by past errors or mistakes and you are unsure where to turn, contact America’s Credit Union today. Our Savings Secured Loan and low rate credit card options can help you build your credit score and our Flexible Checking Account can help get you back on your feet. Our Contact Center Representatives are also available to help you at 972-494-5328.