Have you seen your credit report lately? Most likely not. According to a recent Google Consumer Survey conducted by TransUnion, nearly 33 percent of Americans surveyed said they have never checked their credit report or credit score. Knowing your credit score and understanding all of the information in your credit report is essential for you to make educated financial decisions.
First, it’s important to know what information you will find in your credit report. Look for:
- Basic identifying information. All credit reports will include your name, address, social security number, date of birth, and employment information.
- Accounts Summary. This section summarizes your different credit accounts including any student, home or auto loans, bankcards, and credit cards. Information on your credit limit, loan amount, account balance, and payment history are also included.
- Credit inquiries. This section includes all lenders who have accessed your credit report within the last two years. It is important to note that your credit score can be affected if you apply for several loans within a short period of time, resulting in many voluntary inquiries on your credit report.
- Public record and collection items. Any items that are considered public record are included in your credit report. This includes foreclosures, bankruptcies, judgments, and liens.
Now that you understand what information is included in your credit report, here’s what lenders are looking for when reviewing your credit report:
- How many accounts you have and what kind. Creditors are seeking individuals who have several different established accounts.
- Late payments. Lenders are looking for someone who is stable and reliable. Frequent late payments does not reflect stability.
- Longevity of accounts. The longer your accounts are open, the better. This means you have made consistent payments over a longer period of time.
- Collections actions. Debt collection means you are at a higher risk for not making payments on future accounts, lowering your chances to receive any new line of credit.
- Outstanding debt. Lenders typically calculate your debt-to-income ratio. The lower your ratio, the better.
- Public records. Adverse public records have less effect on your credit score as time passes, but they can remain on your credit report for up to 10 years based on what type of public record it is. For example, judgments remain on your credit report for seven years from the date filed.
By understanding what lenders are looking for, it can help you achieve and maintain a high credit score as reflected in your credit report. Whether you are building or working to improve your credit score, it is critical to review your credit report annually.
There are three credit-reporting agencies that can provide you with your report: Equifax, Experian and TransUnion. We recommend you review your report with all three agencies to ensure there are no discrepancies since each agency receives different information about you. You are entitled to one free credit report a year from the agency of your choice. If upon reviewing your report, you find false information, it’s critical you dispute it immediately.
If you are currently experiencing challenges with your credit, there are various ways to help repair it. Let us at Ovation help you. We offer a wide range of credit repair solutions, customized to meet your unique needs.
Contact us today to see how we can help.