Understanding how to read your credit report is important if you’re planning on fixing your credit.  That’s because the first (and one of the most important) steps in the process is to check your report for inaccurate or incomplete information.  If you do find errors, it’s likely to be in the section of your report that lists your different debts and credit accounts.

The 7 Items on Your Credit Report You Should Know

Looking at your credit report, you’ll see a section that lists every one of your accounts—and these will include all the data you need to identify errors.  Typically, there are 7 specific items you should be looking for:

1. The name of your creditor
2. The account number
3. The type of credit it is
4. Your payment history
5. Your balance and limit
6. The date you opened the account
7. The date of last activity

All of these items are important—they should bring to your attention anything that doesn’t seem accurate or complete.  Naturally, in order for you to fix credit report problems, you’ll first have to know what they are.

How to Identify Mistakes on Your Credit Report

Here’s how keeping your own records can be useful.  It’s easy to compare the information on your credit report to your own personal records.  If you haven’t held onto your records, you can still identify mistakes (or at least possible mistakes) by memory.  Anything that just doesn’t seem right to you may be worth verification.

• The Name of Your Creditor and Account Number—basically, if you don’t recognize the creditor, there’s a reason to assume it may be inaccurate or not even your account at all.  Keep in mind that defaulted accounts are often sent to collection agencies you may not be familiar with.  If you have any doubts, an investigation may be necessary.  The account number is important, of course, if you wish to have the account verified—you’ll have to reference it later.

• The Type of Credit—generally, there are 3 kinds of debt: installment, revolving and open.  Installment loans, such as mortgages and auto loans, are debts that require fixed payments each month until the balance is completely paid off.  Revolving credit—credit cards, for example—are small “credit” loans made each month that carry a limit and a minimum balance.  Open credit commonly includes utility accounts and other services such as cell phone and internet packages.  You are expected to pay your balance in full each month.  The reason the type of credit you have on you report is important is because your credit can be optimized by having the right combination of account types.  If your report indicates inaccurate credit types, your score may drop.  This is an error you can easily fix.

• Your Payment History—it’s important that your payment history is reporting accurately.  That’s because even minor marks, such as late pays, can be considerably damaging to your credit score.  An accurate payment history can also help resolve issues with collection accounts, as your date-of-last-activity will help determine if any one account is rightfully under collection status or not.

• Your Balance and Limit—this one’s easy.  If your credit report indicates you owe a creditor more than you actually do, it’s necessary to have it corrected (See dispute original creditor).  Additionally, if your limit (or balance) is reporting inaccurately, it can throw of your whole balance-to-limit ratio and lower your credit score—it can also result in higher than normal interest rates and cost you more money in the long run.

• The Date You Opened the Account—knowing what date you opened any account can help you track payment issues, balance issues, and other credit history concerns.  For example, if your account has been actively maintained for 5 years and your report indicates that it’s only been 2, you’re not getting fair credit for three years worth of positive activity.  This is a good example of how any small reporting error can cause unnecessary damage to your credit.

• The Date of Last Activity—the date of last activity is important to any account.  Charge-offs and collections are determined by this date, and you may have had 1 or more accounts go into default unrightfully.  In addition to charge-offs and collections, the statute of limitations will be affected by an inaccurate date of last activity, possibly resulting in other credit repair complications.

By law, you are entitled to a fair and accurate credit report.  If you feel for any reason that there is inaccurate or incomplete information on your credit report, you have a right to have it verified or validated.  This can be done by writing a dispute letter or validation letter.

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