How to Understand Credit Report Codes

It's good to get your credit reports regularly. You can check for errors and see areas where your credit rating could be improved, but you need to understand your credit report and the codes. There are three credit reporting bureaus: Experian, Equifax and TransUnion. The general format for each credit report is similar, but the credit codes and scoring methods are different. Understanding your credit report codes will enable you to monitor change each time you get a report.

Instructions

1

Get your credit reports and scores for all three credit reporting bureaus to understand your credit report codes. You can get your credit reports free once a year from AnnualCreditReport.com, but your free reports don't show your credit score.

2

Check through your report to get a basic understanding of the sections. The first few sections summarize your personal details, employment information and an overview of your credit history.

3

Check the payment history section (usually section 9). This is where you need to understand the credit report codes. Your payment history code has a letter and a number. The numbers are from 0 to 9 where 0 indicates up-to-date payments and 9, collection or bankruptcy. Numbers 1 through 6 show the number of days a payment is late. Thirty days has a code of 1 while 180 days has a code of 6. It is slightly different on a TransUnion report with the number 2 representing 30 days late and 7 180 days late.

4

Check the letters that are shown. Experian use C, Equifax use * (TransUnion uses the numbers 0 or 1) to indicate your account is good. Other letters range from G, meaning collection, to K, meaning repossession. H is foreclosure and J, voluntary surrender. Ideally your credit code for each line of credit should be C0, *0 or simply 0 or 1 for TransUnion.

5

Review the credit-score section. You will usually find it in section 5 of the report. Three different models are used for scoring: Experian uses FICO (Fair Isaac Corp.), TransUnion uses Empirica, and Equifax uses Beacon. The score range is similar for all three and is between 300 and 850. A score below 450 is considered to be low and may create problems when applying for credit. Scores greater than 650 are considered good.

6

Read the other sections so you have a complete understanding of your credit report. All are self-explanatory.