Understanding your Credit Report

Credit Report definition: A record of an individual’s or business’ loans and repayments, including late payments and bankruptcy filings. Information about the consumer’s identity, salary, place of employment, length of employment, home address, and length of residence are sent to credit bureaus when a consumer completes an application for credit from a bank, store, or credit card company. The credit bureaus compare the identifying information with the information retained by the bureau in its files.

Categories of Information

Identifying Information

Your names, addresses, Social Security number, date of birth and employment information are not used in credit scoring. Updates from information you provide to credit issuers and lenders.

Trade Lines

Your credit accounts are reported by the type of account (bankcard, auto loan, mortgage, or other), the date you established the account, your credit limit or loan amount, the account balance and your payment history.

Credit Inquiries

This section contains everyone who accessed your report within the last two years. The report you see lists “voluntary” inquiries, prompted by your own requests for credit, and “involuntary” inquires, when lenders run your report to send you a pre-approved offers.

Public Record and Collection Items

Credit bureaus collect public record information from state and county courts, and information from collection agencies. Public records include bankruptcies, foreclosures, suits, wage garnishments, liens and judgments.

What everyone wants to know

How long do negative items remain on my credit report?

This is a list of the amount of time negative items may remain on your credit report:

Paid and Closed Revolving/Installment Accounts

years

Judgment

years from date it was reported

Paid Tax Lien

years from date paid

Unpaid Tax Lien

years

Collection

years from date of original delinquency

Credit Inquiries

years

Foreclosure

years from filing date

Bankruptcy Chapter 13

years from the filing date

Bankruptcy Chapter 7, 11, or 12

years on credit report with additional 3 years in public record

Charge off

years from the date of original delinquency

Active Positive information may remain on your report indefinitely.

How is my credit score calculated?

Payment history accounts for 35% of your credit score.

Credit issuers look at how you pay your debts. Late payments, collections, and bankruptcies affect the payment history portion of your credit score. The more recent delinquencies affect your credit score more than those of the past.

Debt level accounts for 30% of your credit score.

Credit utilization definition – The amount of debt you have in compared to your credit limits. Higher credit utilization means that you are closer to your limits and this may result in a lower credit score. Length of credit history accounts for 15% of your credit score. A longer credit history provides more information about your spending. It is beneficial to leave older accounts in good standing open in most cases.

Inquiries are 10% of your credit score.

Multiple applications for credit may indicate that you are taking on a lot of debt or that you are in financial trouble. Although inquiries may remain on your credit report for two years, your credit score is calculated using the inquiries made within one year.

Mix of credit is 10% of your credit score.

Different types of credit are favorable to your credit score because they indicate that you have experience managing a mix of credit.