Credit Report Intricacies....

December 15th, 2008 3:33 PM

Have you ever tried to make sense out of the binomial theorem? Or the equation for cell voltage? You might have that same feeling of confusion when you pull your free annual credit report. Thankfully, a short lesson in the intricacies of the credit report can teach you everything you need to know.

Don't pay for free items

By law, Equifax, Experian and TransUnion must provide you with one free copy of your credit report annually. You can obtain your free reports by calling or writing each agency individually, or you can access all three reports online at www.AnnualCreditReport.com. It's the only website that's officially authorized to provide this information.

Get your fine tooth comb

Here's where things might get tricky. Each report contains four main types of data that you'll want to review: personal information, account information, public records, and inquiries.

1. Personal information. This includes your name, Social Security number, date of birth, address and, sometimes, your phone number. You'll probably see several versions of your name, and maybe a couple of Social Security numbers, as well. Minor misspellings of your name are common and don't need to be corrected. But radically different names, addresses, or Social Security numbers should be addressed.
2. Account information. This is the heart and soul of your report. Your accounts may be grouped by type (installment, mortgage, and revolving credit), or by status (satisfactory or unsatisfactory). Verify that the accounts listed actually belong to you. Also, check the credit limit, opening date, and account status for each one. If your account status is anything but "pays as agreed," look to the payment history for the reason. The payment history is a monthly reporting that uses symbols to denote whether your payments have been on time or not. There will be a legend that explains what each symbol means.
3. Public records. The public records section shows bankruptcies, judgments, and tax liens. Hopefully, you have none of these listed.
4. Inquiries. Here you'll find a list of the entities that have pulled your credit report, which will be grouped by type. Each agency names the inquiries differently, but there are three general categories: regular, promotional, and account reviews. Regular inquiries, also called hard inquiries, are the most important; these are used to support a loan or credit card application that you've completed. If you have too many of them, it will be a red flag. Hard inquiries remain on your report for two years and have a more dramatic impact on your credit score than the other two types.

If you see any mistakes or omissions, check the report itself for instructions on how to dispute those inaccuracies.

Reading your credit reports can be tedious. But unless you're a math genius, you'll find that it's far easier than calculating the voltage of electrochemical cells.

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