How to read Credit Report

A credit report is a comprehensive account of the credit history of an individual. The credit report would provide information on your credit accounts, such as a registered lender’s credit card, auto loans, home loans, and any other form of credit. Details such as payment history, credit cap, and account balance, opening date of credit, loan status (close or open, paid in full, not paid in full) will also be included in the credit report. New credit inquiries, collection reports, and public records may also be included in the report for instances in which a person has applied for bankruptcy or a tax lien.

A credit report may seem like an intimidating document to read, but a section-wise breakdown of how a person can read his or her credit report is described below:

             A. Personal Information

This section of the credit report would include details relating to the identity of the individual, such as the name of the individual, address, current and previous accounts, date of birth, etc. If there is an incorrect address in the report or the name of the person has been misspelled, an individual should verify the information given under this section, he/she should report this to the Credit Rating Agency (CRA) as this may be a sign of incorrect data being reflected in the report or credit fraud.

             B. Account Information

This section of the credit report includes details relating to the current and previous credit account of the individual. As this is very a comprehensive section, the person should carefully review the details of this section. They should review the following details:

  • Date of opening
  • Name of creditor
  • Current balance
  • Highest balance/credit limit
  • Monthly payment history
  • Account type (Instalment, revolving, open)
  • Account ownership (Individual or joint)
  • Payment status

To verify that they are correct, the person should check the information in this section. On the statement date, the balance displayed in different accounts can be a little misleading, since it can represent a balance even though the person has paid off in full or can display accounts that were closed before the credit report was received.

           C. Public Records

This section of the Credit Report will list the individual, the tax liens used by the individual or the collection accounts, and the bankruptcies filed. It is important to verify the dates given in this section as they will directly impact how long they will appear on the credit report of an individual and affect the credit score of the person.

           D. Inquiries

This section contains details relating to any inquiries made by corporations about the credit score of a person. If a person applies for multiple lines of credit, his / her score could be negatively affected by this. In most cases, inquiries do not impact the credit score of an individual, since they are soft inquiries for promotional purposes by lenders. A soft inquiry is created when the credit report request is not related to the credit request of the person.