How to Read Your Credit Report Rating

The information contained in your credit report is critical because it establishes your creditworthiness to potential lenders. You should periodically review it for accuracy -- but that may be easier said than done considering the volume of information reported, not to mention that it can be a confusing array of codes and numbers that may be presented and formatted differently, depending on the reporting agency.

Instructions

Preparation

1

Review the format. All credit reporting agencies uniformly present some information. For example, personal information like your name, address, date of birth and employment history will likely appear at or near the top of the report. However, depending on the agency from which you obtain the report, the format used to present your credit history -- the information that determines your credit rating -- can vary from one reporting agency to the next. Scan your credit report to gain an understanding of its format, as well as the manner in which information is presented.

2

Identify complex reporting elements. Your credit report may use alpha and numeric codes, rather than easily understandable words, for some information. This can be especially true for information that pertains to your payment patterns and use of credit. Additionally, some of the codes -- as well as the scope of the information reported -- can vary by credit reporting agency. Scan your credit report to determine and note the information that is presented in code or that you otherwise cannot understand.

3

Have the information key readily available as you scrutinize the details in your credit report. To help you understand the various codes and information fields on your report, it should also contain a glossary of the terminology and coded data; however, the location within your credit report of these terms and codes can also vary by reporting agency.

Implementation

4

Review creditors. The names of the creditors reporting your information should be listed. This information may also be titled "trade lines" or "account name." Your account number with each creditor may also appear in or near this section.

5

Check account ownership. This information identifies ownership of the account. It may also be titled "ECOA" because it refers to the Equal Credit Opportunity Act, which makes it illegal for creditors to discriminate based on your marital status, gender, age, whether you receive public assistance and other factors. Ownership may be spelled out -- for example, "individual" -- or may be reported using one of nine possible alphabetical codes: A -- authorized user, C -- joint account, I -- individual account, M -- you are the account owner, but the cosigner is responsible if you default, P -- shared account that cannot be distinguished from either A or C, S -- you're the cosigner and are responsible if the owner defaults, T -- your relationship with the account has been terminated, U -- undesignated, X -- account owner is deceased.

6

Review specific activities. Your borrowing and repayment behaviors are important determinants of your overall credit rating. Among the information you should carefully scrutinize and review for accuracy: Types of accounts: This identifies the nature of the credit. For example, installment, revolving and mortgage. Date opened: This is the month and year in which you opened the account. Date verified: This is the date the account was last updated. Last activity: This is the last date on which your account had activity and could be the date your last payment was processed or the date of the last charge on the account. Manner of payment: This indicates whether your payments are current or the extent to which they are delinquent. High credit: This could be either your credit limit with the reporting creditor or the largest balance you've carried with that creditor.