How to Read an Experian, Equifax or Trans Union Credit Report

Pay close attention to the personal information.
The first section of your credit report contains personal information about you, the borrower. You'll see date of birth, current and former addresses, employer information and information about your spouse. Errors on the personal information section of your credit report may be as simple as a transposed former street address, or as potentially dangerous as an incorrect social security number. Regardless of the nature of the error, it's important to clear up any errors in the personal information section of your credit report.

Incorrect street addresses may cause you to fail verification processes when applying for new credit, while an incorrect social security number may result in erroneous credit entries on your credit report, as your credit is mixed with the credit of another party. An incorrect social security number may also indicate identity theft. Pay close attention to this section of your credit report to ensure that your credit isn't compromised.

How to read the credit summary.
To better understand your credit report, it's useful to know what to look for in each section of the report. In the credit summary section, you'll see a brief overview of all of your credit accounts. The summary section lists accounts by type; real estate, revolving accounts, instalment accounts, other accounts and collection accounts; and lists summary information for each account type. For example, if you have three credit cards, the "Revolving Account" portion of your credit summary would list 3 credit cards, the total balance of all three cards, the total monthly payments you must make all three accounts, and information about how many accounts are current, delinquent, derogatory or have an unknown status. You may see discrepancies across bureaus in this section, as not all creditors report information to all bureaus. Credit reports from various bureaus may be missing one or more cards, and many department store credit cards do not report to a credit bureau at all.

Understanding Credit Reports: Account History.
While the other sections of your credit report are important, the account history is the section that typically gets the most attention – and also happens to be the most difficult to read. Your account history lists every credit account within the past seven years, along with status, high balance, credit limit, current balance and notes on delinquency. This section is the most difficult part of your credit report to understand, and it also varies between reporting agencies. Using the Annual Credit Report Service really helps you here, as it uses a standardized format across the three bureaus and ensures you're looking at a credit report designed for consumer use. Credit reports for lenders and industry professionals often employ numbered codes and abbreviations that you'll never decipher without professional assistance, so it's important to get a copy of your credit report designed for consumer use.

The account history section of your credit report includes detailed information about each of your credit accounts. Depending on the bureau, your credit report may contain a 'remarks' section for your accounts where creditors can make comments about past and current payment history. You'll also see a payment history for each account, including an indicator for each month showing whether it was paid on time or 30, 60 or 90 days late. Lenders pay close attention to this section of the report, so it's vital to make sure that everything is up-to-date and that the account history section does not contain any errors. Look for things like "responsibility" listing whether you are individually, jointly responsible or a co-signer for payment of each account. Make sure the account type is correctly categorized, either as revolving (credit card), instalment (auto or personal loan) or open (entire balance due each month, such as American Express).

How to read a credit report inquiry section.
Credit inquiries come in two types: "soft" inquiries where existing creditors pull your credit to determine status or for promotional offers, and "hard" inquiries where new creditors pull your credit in response to your application for credit. Credit inquiries stay on your credit report for two years, but only "hard" inquiries impact your credit score. The big thing to note in this section is whether any unauthorized "hard" inquiries appear, in which case you may be a victim of identity theft. If you see an unauthorized entry, contact the creditor to determine how and why the credit report was requested.

Help with credit reports.
Learning how to read your credit report is only half the battle. It's absolutely essential to be pro-active about your credit, so it's important to correct any errors that you find on your credit report. Not sure how to correct errors or whether an error warrants correction? Sign up for our free credit secrets newsletter. If you're looking for the definitive source for disputing errors on your credit report or have a specific question, try the Credit Secrets Bible.