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Understanding your Credit Reports

A 10-part Credit Repair Guide

<< Part 4 — Part 5Part 6 >>

understanding your credit reportsHow to Read a Credit Report
Under the Fair Credit Reporting Act (FCRA), everyone is entitled to one free credit report each year. Before you request your free credit report and possibly contact credit repair services, we'll teach you all you need to know about understanding credit reports.

Get your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion).  It's important to request all three credit reports, since there may be inaccuracies on one report that may not appear on the others. That's why you may have an Experian score of 605 and a TransUnion score of 660. Having even one low credit score will drastically affect your ability to get approved for loans and credit, as well as your interest rates.

Basic information on your reports includes your name, social security number, phone numbers, date of birth, current and previous addresses, and your current employer. If you are married, have been married in the past, or have undergone a legal name change; the report will list all the other names you've been known by.

Each credit report will list your bill-paying practices, whether or not you pay those bills on time, what types of accounts you have, how many accounts you have, and your levels of debt. The reports will also list public record information like bankruptcies, criminal charges, and past due payments.

Your report also includes who's looked at your credit file (a.k.a. credit inquiries). All inquiries are labeled as "hard" or "soft." Hard inquiries are made by prospective lenders when you apply for loans or lines of credit. A large number of hard inquiries within a short period of time will affect your credit score. Soft inquiries are made by you when you check your credit scores and by credit card companies prior to sending you pre-approved offers in the mail. A soft inquiry will have no effect on your credit score.

how to properly read a credit report

Go to Part 6 — Checking Credit Reports for Accuracy
Learn how these errors can drastically affect your credit score, and why it's important to get them removed immediately.

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