How to Read and Understand Your Tri-Merge Credit Reports

Credit history is an important part of overall financial health. Strong credit is rewarded by lenders in the form of low fees and low rates on all types of consumer loans--including large mortgages. The best way to monitor your credit is to periodically access and review your three credit-bureau reports. These are sometimes called tri-merge reports. Essentially, they are three separate reports from the main credit bureaus--TransUnion, Experian and Equifax. Once you have this report, though, you must be able to understand what you are reading.

Instructions

1

Visit the AnnualCreditReport website. This is the federally mandated website for American consumers. The passage of the Fair Credit Reporting Act (FCRA) mandated that all consumers could access their reports once per year for free. You will need to make three separate transactions to get all three reports.

2

Look at the personal information section first. This will list your demographic information, such as name, address, Social Security number, date of birth, employer and phone number. Double-check this information for accuracy. You will need to contact the credit bureaus if this information is incorrect.

3

Find the inquiries section on the tri-merge report. This will list all hard inquiries on your report. "Hard" inquiries are generated when a lender pulls your credit. "Soft" inquiries, such as when you pull your own credit, do not show up on this list. If you have more than six inquiries in the last six months, your rating may suffer. Lenders see excessive inquiries as deteriorating credit.

4

Look for the public records section. This is the area where you'll find all publicly disclosed information regarding your credit. Common public records are credit report liens (taxes, usually), bankruptcies and judgments. These are all negative marks on your credit. When cleaning up your credit, these issues must take priority.

5

Find the trade lines. This is the meat of the tri-merge report. This section lists, in all likelihood, all of your credit accounts--both open and closed. It shows payment history, when you opened accounts, balances and payment amounts. Lenders scrutinize this section very carefully. If you have delinquent accounts, credit cards with high or over-limit balances, or charged-off accounts, your rating will suffer.