Aug 12 · 3 min read
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In order to master your credit, you must first understand what credit reports are and how they can either help you reach your financial goals or hold you back from them.
Your credit reports come directly from either Equifax, Experian, or TransUnion and contain a complete picture of your credit history. Because each credit bureau has unique information about your credit history, you will have three different credit reports. These credit reports are very important because they are used to calculate your credit scores and determine if you will be approved for a loan and at what interest rate. They are also used to determine if you will get a job, cheap or expensive insurance, and the ability to rent an apartment or home.
If the information in your credit report shows you are a responsible borrower, you will be approved for credit and loans with low-interest rates that save you money over time. You’ll also get cheaper insurance, opportunities to rent the best apartments and homes, and job opportunities.
If instead, your credit report shows you are a risky borrower, you will most likely receive credit and loans with high-interest rates or be declined to borrow money altogether. A bad credit report can also prevent you from getting the home you want or your dream job. Ultimately, this could cost you thousands of dollars over time.
To ensure your credit reports are helping you save money instead of taking it away, you’ll want to get whyze and learn exactly what’s in your reports.
Regardless of which credit bureau you are using to access your credit report, your reports will contain basically the same four categories:
Let’s get whyze and look a little deeper into each.
The personal information section of your credit report will include your name, birthday, social security number, and phone number. It will also include a list of your previous and current addresses and places of employment. While this section isn’t used to calculate your credit score, it will be used for identification purposes.
The next section of your credit report will be a summary of your credit accounts. This will be the core of your credit report. This section, also known as your Trade Lines, is the most important because it will summarize your open and closed bank accounts, credit cards, mortgages, auto loans, student loans, and personal loans. For each account, your credit report will list key details such as your balance, credit limit, loan amount, and your payment history. If you have ever made a late payment, it will be listed in this section and for a very long time. Each late or missed payment will stay on your credit report for seven years from the date the payment was missed.
The following section will summarize your credit inquiries. This will include a detailed list of every time you or a lender have asked for a copy of your credit report. Typically, this section will be divided into hard and soft inquiries. Hard inquiries are made by companies that you have applied for a loan or credit with. These inquiries may impact your credit score. Soft inquiries, on the other hand, are made by you to check your own credit or by companies making promotional credit offers or periodically checking your credit. These inquiries will not impact your credit score. Both types of inquiries will remain on your credit report for two years.
The last section will include any public record of debts and overdue amounts in collections. While this section is best when empty, it pays off to know what exactly will be shown to lenders in this section and for how long. Included in this section will be bankruptcies, judgments from lawsuits, debt settlements, tax liens, foreclosures, and accounts in collections or charged off.
Collections, judgments for lawsuits, debt settlements, foreclosures, and paid tax liens will stay on your credit report for seven years. Bankruptcies will remain on your credit report for seven to ten years depending on the type of bankruptcy. And unpaid tax liens may remain on your credit report forever.
Collectively, these four sections will create your credit report! Now that you know what’s inside your credit report, you’ll want to get whyze and learn how and when you should access them. Watch the next video to find out!
Mastering Your Credit Score