Reading Credit Reports: The 3 Most Important Figures

Reading credit reports can be tricky if you have never done it before. Your credit report has some of the most important information of your financial situation. It indicates how creditors consider you as a potential borrower and helps determine how much you will pay on interest in the future. It can be the difference in whether or not you can buy the house of your dreams or that car that you've always wanted. Here are a few of the most important things in your credit report.

1. Credit Score

Your credit score is the most important figure on your credit report. Lenders often look at this number above everything else when deciding whether or not to lend you money. This number represents a condensed version of your credit report. It summarizes everything for the lender based on a complicated system that is weighted towards considerations that lenders value the most. Therefore, if your score is high, you are an attractive borrower. If your score is low, the banks will think twice before lending you money. They will also charge you a premium to lend you the money you need. Generally, scores at 640 or below are considered poor, while scores in the 700's are viewed as positive. Those with high scores will get first access to the best interest rates available in the market regardless of where they want to borrow money.

2. Account History

This section of the report is very important as well. This lists out all of your creditors that you have accounts with. It usually even lists accounts that have been closed in the last several years. This gives the lenders a portrait of what type of debt you have and how you have handled each individual account. The information will include the name of the creditor, the account number, as well as how much you owe. It will usually show the monthly payment that you have and tell whether or not you have paid it on time.

This is a valuable section to look at because you can quickly tell if there are any accounts that are not yours attached to your report. Sometimes credit bureaus attach an account to the wrong report. You must correct any potential errors that are on your report. Sometimes identity theft will show up as an account has been opened in your name.

3. Public Records

This section of your report will list any potential items that are on public record. This will include bankruptcies, liens, judgements against you and similar types of information. You will want to make sure this is accurate as well. This is often where lenders will look quickly to see if you are worth getting involved with.


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