It could be a bit difficult to understand your credit report especially if you are seeing it for the first time. Many numbers and text all processed into the information about how you have fared over the years and are currently faring with paying back all the debts you owe across all sectors in the country.
The first thing you need to remember when you receive your credit report is that the details in there are all about you and your performance so far with repaying the loans and credit facilities you have ever accessed. You may have a hard time interpreting all the information in your credit report but you learn to understand how to read it – understanding your credit report helps you to identify the problem areas and work on improving them. Your credit report is the collective opinion of how well you stand in the assessments of any lender home or abroad. Hence, you must make it a point to read and understand every detail in it.
Get one free report for Starters
Everyone is entitled to one free credit report every year. So, you can take the plunge to find out what has been reported about you and learn how to interpret the information therein at no cost. The free report is much easier to understand and gives you a summary of what you should expect in the paid report, which is a well detailed report with more information on all that has been submitted by lenders.
Understand the set up
A CRC credit report is divided into four sections with CRC Score – personal information, credit history, public records and inquiries.
Personal Information: is just information to identify you. Look at it closely to make sure it’s accurate. It includes your full name, date of birth, gender and marital status. It also includes your father and mother’s names, current and previous telephone numbers, current and previous addresses, email address(es), bank verification number, identification number, current and previous employers and nationality.
Contact Information can have up to four addresses that can include permanent, temporary and office addresses. Email IDs and phone numbers as provided by the lenders will also be listed.
Employment Information can relate details about employers and income at the time of applying for a loan or a credit card. In case of two more different applications, this data can vary.
Credit history: This section gives a breakdown of the debt information or loan facilities of the individual. It includes the number of loans the person has taken, the approved amounts, and how much the person has left to pay.
Public records: This is just simply information that includes, court orders, court records, court judgements, bankruptcies, tax liens, foreclosures, etc. that have been collected concerning you.
Inquiries: This section lists the number of times the individual’s report has been checked by potential lenders. It also shows how many times the borrower has checked their own credit report. It refers to the number of times searches have been carried out on you by other people and organizations.
Now that you understand how the credit report is structured, the next step is to analyze at what your credit status is. To do this, your focus would be more on the credit history section. Every credit account in this section is referred to as a trade lines. Each trade line includes the name of the creditor and the credit account number, which may be scrambled for security purposes. You may have more than one account from a creditor. For example, many creditors have more than one kind of loan. The trade line will also include:
- The kind of credit (installment, such as a mortgage or car loan, or revolving, such as a department store credit card).
- Whether the account is in your name alone or with another person.
- Total amount of the loan, high credit limit or highest balance on the card.
- How much you still owe.
- Fixed monthly payments or minimum monthly amount.
- Status of the account (open, inactive, closed, paid, etc.).
- How well you’ve paid the account.
If your loan accounts are in arrears or were in the recent past, it will show by how much and for how many days you were behind with payments. Your payment history accounts for 35% of your credit score, which is the largest contributing factor. Hence, it’s crucial that you perform your due diligence and make sure everything is accurate in this section.
It is in your best interests to maintain a healthy credit report. When you need to apply for credit or you wish to negotiate interest rates, a report in good standing will put you in a position of power and you will get preferential credit and interest rates.
Although rare, sometimes incorrect information or even fraudulent activity finds its way on to your report which will have a negative effect on your ability to get credit and may even lead to other challenges; like missing a job appointment, lose out on a contract, etc.
It is therefore important that you are aware of your status with the credit bureaus and that you understand how the reports work. You can subscribe to an annual subscription to receive monthly updates at a token. This delivers to your email, monthly updates as they are submitted to the credit bureau throughout the year.
It is not advisable to bury your head in the sand and not want to look at your credit report. Making yourself aware of it and understanding it will assist you to improve your credit profile, then maintain it if it is good.
Fraud and errors do occur to which you might be oblivious and these could have a detrimental effect on your ability to raise credit. Take the time to obtain the reports at least once a year to assess the situation and take appropriate action where necessary. Also remember that your credit report directly affects your credit score so you should have a good idea of what factors affect your score to continue working to improve it.
If there are any relevant inaccuracies on your report, dispute them. Pull your credit reports every year to make sure they’re all correct. Inaccuracies may lower your credit score and keep you from obtaining credit when you need it. If you find any mistakes, dispute them immediately to keep your credit in good standing.