Breaking Down a Credit Report

This post will explain some of the things that can be found on a credit report. This post was developed using an Experian credit report; however, Transunion and Equifax may display their credit report in a similar way. 

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First, let's begin by answering “What is a credit report?”

A credit report compiles the credit history of an individual. The information is housed mainly within three credit bureaus and contains the individual’s history of borrowing, payment timeliness, and number of credit inquiries. 

Credit reports basically sum up how good we are at paying back debt. The lenders review our credit report to determine the risk in extending credit to us and what the lending terms will be. 

Names of the credit bureaus include Experian, Equifax, and Transunion. There have been reports that other credit bureaus exist but the list above are the main three. 

Depending on which bureau’s report you are reviewing, some information may appear differently on each page. If you can’t get access to your physical credit report, you can download the Credit Sesame app to access credit monitoring electronically. They do a great job of breaking down credit reports and giving you more tips than their competitors. To learn about sites and apps that give you access to free credit monitoring click here to see my post “How We Can Monitor Our Credit for Free”. 

The Payment History

The payment history section of a credit report shows you how current your accounts are. For each month on each loan or credit line you have opened in your name, the report will indicate any payments that were 30 days, 60 days, 90 days, 120 days, 150 days, or 180 days past due. The report will also indicate any foreclosure proceedings, repossessions, insurance claims, collections, charge offs, closed accounts, or display No data for the Time period etc. 

The late payments are recorded on the credit file when the individual misses paying at least the minimum payment by the deadline designated by the lender/creditor. If a payment goes between 150 – 180 days past due, most creditors will send the account to a collections company. The Collections Department will try to get the past due debt repaid and your credit score will drop by 25-120 points. 

For more information on foreclosure proceedings, repossessions, insurance claims, collections, bankruptcies, charge offs etc. Please speak with your financial advisor or attorney if needed. 

Accounts that may be considered negative: As stated above some of the most common things that report negatively on your credit reports are charge offs, collections, and bankruptcies. This negative information can remain on your credit report for 7 years for missed payments and up to 10 years for Chapter 7, 11, or 12, bankruptcies.

If you have any potentially negative information on your credit report it will be listed under this section. 

Credit Items/Account Details: 

Under this tab you will see all accounts associated with your name and social security number listed. Here you will see the name of the creditor that lent you the line of credit or loan, your partial account number, and the creditor’s address and phone number. 

There will be a few sections under this tab that provide details about the account. This includes:

• Date Opened- The date the account was opened. 

• Address ID-  The ID number that the credit bureau assigns to the address the creditor has on file for you.

• Type- Describes the type of account (i.e. credit card, mortgage, education (i.e. student loans), etc. 

• Responsibility- This section specifies the ownership of the account (i.e. Individual, authorized user, or if the account is joint with someone else), etc. 

• First Reported- The month and year the credit bureaus began reporting the account. 

• Monthly Payment- The amount that is due to be paid monthly. 

• Credit Limit- The line of credit that was approved and given to the account holder. 

• High Balance- The highest balance that was carried on the credit card within a certain amount of time. 

• Recent Balance- the previous reported balance on your credit line. 

• Status- Shows the current status of the account (i.e. Open/never late, paid/closed, closed etc.) 

• Date of Status- The last time the status of the account was reported by the creditor to the bureau.

Account History- This section may show some of the following acronyms, (AB),(DPR),(SPA),(AAP), which stand for, the Account Balance, Date the payment was received, Scheduled Payments, and Actual Amount paid, respectively. 

This section will break down your balances owed from month to month. If you are carrying a balance you will see the number of months that you have carried a balance and the amount owed each month. At the bottom of the account history you will see the range of months you have carried a balance on the line of credit. For example, it may say “Between January 2019 and March 2020 your credit limit/high limit was $234.”

Credit Utilization- is a percentage calculated from the total amount of credit currently used divided by the total amount of revolving credit you have. Rule of thumb is to try and keep your credit utilization under 20% for credit cards. For more diverse credit reports that include mortgages and real estate please speak to your financial advisors to understand your credit utilization percentage. 

Credit Applications/ Hard Inquiries - Hard inquiries are requests that allow lenders to look at your credit report to see if they will be able to lend you a line of credit and on what interest rate terms. Be mindful of the amount of hard inquiries you allow. Hard inquiries stay on your credit report for 2 years and can negatively impact your credit score. 

Consumer Report Views/ Soft Inquiries - Soft inquiries are sometimes initiated by lenders or service providers to see if you pre-qualify instead of initiating a hard inquiry. Certain credit monitoring sites and software may use soft inquiries to update you on your credit score monthly; such as Credit Sesame or credit card company. Soft inquiries do not affect your credit score. 

Personal information - This section shows the name and name variations reported on the credit bureaus’ database for an individual. For example, If your name is Brian John Henry, you may see variations such as, Brian J. Henry or Brian Henry. It depends on the name variation you used when you applied for the line of credit. So be sure to check and review this section to make sure your name is being reported accurately. 

Also, there’s a section that displays address(es). These are addresses where you previously lived or currently live that are being reported on the credit bureaus’ database. Credit reports may also include an information section on your year of birth, telephone numbers, or current employers. 

**There’s a section at the bottom of the page entitled: Summary of your Rights under the Fair Reporting Act. Please make sure you read and understand your rights. If you do not understand what the act means, or all of your rights, please speak to a financial/credit advisor or attorney. 

ALRIGHT THENNNN…So now you should have a better basic understanding of the definitions and break down of a credit report! It’s important to know these things. There were some things that I briefly mentioned and didn’t elaborate on too much. For example, foreclosures, bankruptcies, and charge offs etc. should be discussed with your financial advisor or attorney because everyone’s situation regarding those topics are different and could be reported correctly or incorrectly. 

If you review your credit report and are in need of credit repair, please reach out to your financial advisor or find a credit repair company you trust. I’ve only used one credit repair company in the past and I only used them for 6 months and ended my membership. I didn’t get any results and decided to work on repairing my credit myself. 

Thank you for reading my post “Breaking Down a Credit Report". Credit is important, and we need to make sure that we all understand what is displayed on our personal credit reports. We all can get our free annual credit reports at annualcreditreport.com. Also, you can use your Credit Sesame app to keep up with what’s reported on your credit report. Please feel free to share comments and subscribe and follow me on social media!