Year: 2015

Your credit report may look like a tangled mess of account information, but it is actually an orderly and efficient way of presenting information. It may be too efficient, since most people have no idea how to read a credit report.

What compounds the problem is that credit reports all look different. Not only are there three main consumer credit bureaus, but depending on which credit report product you order, your report may look different than others.

That being said, you may want to consider where you obtain your credit report so that you can actually understand what you are reading. If you happen to know someone who works for a company that can pull one for you, it might be tempting to ask them to pull one for you. However, doing so is ill-advised, since those hard credit pulls can lower your credit scores. The reports that lenders pull are also the least consumer friendly reports, as they are intended only for professionals used to dealing with those reports.

Instead, consider getting a consumer product that is meant for the average Joe. The reports available through the Annual Credit Report Service are reasonable enough and they are free. My particular favorite are the ones available through Fair Isaac Corporation. For me, it is worth it to pay a few bucks twice a year to obtain actual FICO credit scores based on the information held at each credit bureau. Additionally, the information is organized very well with simple analysis provided for the most important aspects of the reports.

It compares details from my credit reports to those of FICO High Achievers, those who are maximizing their scores based on characteristics of each category. It really is helpful to see how you compare to those with high scores so that you know what actions to take in the future.

There are some key items that you want to look for when reading your credit report. First, look for any negative information that you might want to contest. Negative information may show up as late payments, often reflecting a 30, 60, 90 etc that communicates a 30 day, 60 day or 90 day delinquency. Pay attention to charge-offs, since that can cause the debt to be listed again through a collection agency. Sometimes the collection agency record lists the referring creditor. Other times, you may need to compare the balances to match them up.

The date of last activity is important in terms of closed accounts. Most negative information drops off after 7 years. Positive accounts can remain for 10 years.

The information is organized in a cookie cutter approach, with information on each account listed in the same format. Harder to read credit reports show the order of information prior to the accounts listed, but there is no label within the account record. Therefore, you really have to focus to make sure you know what the amount in line 2 represents.

If you find that you are lost, consider contacting a credit counseling organization to request a credit report review. Most agencies charge less than $25, and many are able to provide the service for free.

720 is an excellent credit score. Excellent credit scores are what everyone would like to have, but may not know how to go about achieving that goal.

The first thing that you must do to improve your credit score is pay all bills when they are due or earlier. Even being only a day late can lower your score. Even if you have made mistakes in the past and do not have an excellent score now, paying everything on time from now on can help to raise your score.

A variety of credit is much better than too much of one and none of another. For example eight credit cards is a lot, and should be reduced to a more reasonable number, like two or three. A couple of credit cards, a car loan and a house mortgage looks much better in your credit file than just having the credit cards.

Keep your credit card balances low. It is not a good idea to charge all your credit cards up to the limit. Try to keep them low so you always show available credit on your reports. Having them high will lower your credit score. If you want to purchase something on credit that may hurt your score, it’s a good idea to rethink it and decide if you really need it.

The length of your credit history is an important part of your score as well. It may take time to have your score go from good to excellent, but keep paying your bills on time, keep your revolving credit line balances low and eventually you will see your score go from very good to excellent.

Having an excellent credit score will help you in the future, you will get much better interest rates when you go for a mortgage, it will be easier to get car loans. Life is a lot easier with an excellent credit score. You will be glad that you put in the effort to makes you excellent.