Consumers are entitled to a free credit report annually from all three credit bureaus. When the reports are received, the consumers may find themselves wondering exactly how to read it. There may be abbreviations and terms they’ve never seen before, leading to confusion.

Credit reports are divided into four sections. The first section is the identification section. In this section are the consumer’s name, date of birth, current and previous addresses, phone number, social security, and spouse’s name (if applicable).

The next section is the credit history. This section includes information on all the consumer’s credit accounts, both open and closed. Creditors are listed along with account numbers, which may be scrambled for security purposes. The date the account was opened is listed, along with whose account it is. Some of the codes that may appear on the report are:

I = Individual

J = Joint

U = Undesignated

M = Maker

C = Co-maker or co-signer

The months the account history has been reviewed are indicated, along with the date of the last activity. The highest amount borrowed is shown as high credit. The current balance is listed. The status of the account is shown as open, inactive, closed, or paid. The type of account may be listed as O for open, R for revolving, or I for installment.

Timeliness of payments is indicated by different abbreviations for different credit bureaus. The most common alphanumeric coding is shown below:

0 = Approved, but account is too new to rate or not yet used

1 = Paid as agreed

2 = 30 or more days past due

3 = 60 or more days past due

4 = 90 or more days past due

5 = 120 or more days past due or is a collection account

7 = Making regular payments under a wage earner plan or other arrangement

8 = Repossession

9 = Charged off account

There is another separate section for accounts that have been referred to collection agencies. Collection accounts will appear on the credit report for seven years. There is a section for public records such as bankruptcies, tax liens, judgments, and overdue child support. Bankruptcies are reported for ten years after the date filed. Other courthouse records will be reported for seven years from the date filed. Items in this section will damage a consumer’s credit faster than any other.

The final section lists recent inquiries for the credit report. This section lists companies that have received the consumer’s credit report during the last 24 months. Only companies that have received the consumer’s written authorization should be able to check their credit.

Consumers have the right to dispute with the credit bureau any information that they believe to be inaccurate. Disputes must be resolved within 45 days. Once the consumer has disputed an item, the credit report states that the item is being disputed. It is important for a consumer to review their credit report annually because it is estimated that as many as 80% of credit reports contain at least one error.

You are entitled to one free copy of your credit report every 12 months from the main consumer reporting companies.  Contact them at annualcreditreport.com.

Resource Links:

>> Equifax.com 

>> Experian.com

>> Transunion.com