|Reading Your Credit Report & ID Theft|
Checking your credit report at least once a year is a smart move. Access to your credit report is also one of the many benefits of ID Secure. But viewing your credit report is only beneficial if you know how to read it. Since reading your report can seem complicated, and expert identity thieves might be savvy enough to fool the average consumer, below you will find a step by step guide to understanding your credit report and spotting red flags.
Who Determines What is On Your Credit Report
The information contained on credit reports come straight from creditors?those you currently have accounts with and those whom you may be applying for new credit with. Some information on your credit report is also drawn from public records. All of this information gets reported to the three major credit reporting agencies: Experian, Trans Union and Equifax.
Because there are only three major credit reporting agencies (also referred to as credit bureaus) people often wrongly assume that all three must have the same information. But that?s not the case. If you are to thoroughly check your credit report, you must obtain a report from all three bureaus?otherwise it?s not worth the effort. Since it is voluntary for creditors to report information to the credit bureaus, some only choose to report to one or two of the agencies. In order to get a truly accurate picture of your credit, all three reports must be obtained and looked over for discrepancies or inaccuracies.
It?s also important that you apply for your credit report directly from the reporting agencies or through a program like ID Secure. That helps ensure that you receive a report tailored to the consumer and not to a creditor. Creditors have different coding and language on their reports that would make it extremely difficult for the average consumer to read his or her report. Although consumer reports aren?t easy to read, they are significantly easier.
Anatomy of a Credit Report
Credit reports are broken primarily into four major categories. Each category has its own vital information and its own potential for identity theft related red flags. It?s important to know what information each category should contain and what various mistakes can mean for your credit. Potential creditors use the results of your three combined reports to determine your credit worthiness. Judging by your past history they deem you reliable or unreliable when it comes to repaying debts. High risk candidates are either denied credit altogether or are charged extremely high interest rates. Potential employers might also consult credit reports to determine how responsible a person may or may not be.
If you have been a victim of identity fraud and have inaccurate information on your credit report as a result, you may find yourself unable to obtain a mortgage at a premium interest rate, or you may be denied your dream job all because someone tarnished your good name without you realizing it. So, here?s what your credit report will tell you and what areas you should be paying special attention to.
Section #1: Identifying Information
The first section of the report will contain information about you like your name, social security number, past and present addresses, date of birth, driver?s license number, your employer?s name and your spouse?s name (if applicable). Don?t be alarmed if you see various spellings of your name. In some cases, creditors get that information wrong and report it inaccurately. Since that name has become associated with your credit file it cannot be removed unless it genuinely represents an account you didn?t open (which you will be able to locate later in the report).
Potential Red Flags in this Section: As you read through this section make sure there aren?t any addresses you don?t recognize listed here. If you spot an unfamiliar address it may be an indicator that an identity thief has opened a new credit account in your name and is having the bills sent to a location you don?t know about. Make sure you also match the social security number and driver?s license number to your own. If that information is incorrect someone might be posing as you and initiating credit transactions on your behalf. It is also important to closely examine the middle initial and/or middle name listed. If it does not match your own there might be an honest mix up (and someone else?s information is appearing on your report) or someone with a similar name may have had an easy time stealing your identity. If you don?t notice any of these problems in this section of your credit report you can move on to examining the next section.
Section #2: Credit History
This is the section that typically contains the most information (and the most room for error) on your credit report. Unfortunately, it?s also one of the most confusing sections of the report to read. Here you will find the name of each creditor along with the account numbers for each line of credit you hold with them (the number may be scrambled or partially blacked out for security purposes). It will also include information like the date the account was opened, the kind of credit (mortgage, revolving, etc?), names of other people on the account, total loan amount (or highest balance in the case of a credit card), how much is owed, the average monthly payment (or minimum due), and the status (open, active, inactive, closed, paid, etc?). Generally it will also state the date that this creditor last reported on this account and your payment history (on time, late, delinquent, etc?). Credit can usually take about 30 to 90 days to appear on a credit report so don?t be alarmed if some of your newer accounts haven?t showed up yet or if existing accounts have old information listed.
Some of the reporting agencies use plain English to report the above mentioned facts. Others, however, use abbreviations and codes to communicate. For instance your status might be represented with a single letter: O=open, R=revolving, I=installment. Your type of account might also be represented by a single letter: I=individual, J=joint, A=authorized user, C=co-signer and S=shared. Your payment history may also be rated on a scale of 1 to 10 with an R1 or I1 representing a high score.
Potential Red Flags in this Section: There are so many things that could be wrong in this section of your report that it is hard to list all of them. First and foremost you want to make sure that you don?t see any accounts that are completely unfamiliar to you. If you do, you will want to work on having that account removed from your credit report immediately. But, you will also want to look for smaller mistakes that could be just as detrimental to your credit. For instance, is there an old account that should be closed that is listed as open or active on your report? This could simply be a clerical error and you may need to contact your creditor and ask for the account to officially be closed. But if there are charges you don?t recognize on that account, an identity thief could have reopened one of your closed accounts so he or she could spend in your name undetected. Also examine the type of account closely. Are there any authorized users you didn?t authorize? In some cases, identity thieves simply call credit card companies and add themselves as authorized users on other people?s accounts.
Section # 3: Public Records
This is the section of your credit report that you want to be completely blank. If this section is not blank it either means you have had some financial problems in the past or that someone has stolen your identity and created problems in your name. This section of your credit report will list any bankruptcies that are seven (or fewer) years old, judgments, tax liens and missed alimony or child support payments. Credit accounts that have gone delinquent and are currently in collections may also appear here or they will appear in their own separate ?Collections? section. If this section appears on your credit report, examine it closely to determine whether or not the information on the report is actually correct.
Section #4: Inquiries
This section could potentially be the longest section of your credit report as it contains the names and information of all of the potential creditors who have requested to view your credit report in recent months. These inquiries are divided into two categories: Hard and Soft. Hard inquiries come from creditors where you initiated the relationship. Examples include applying for credit, applying for a job, or opening a new non-credit account at a doctor?s office or dentist. Soft inquiries come from creditors who are looking to send out mass mailings to pre-approved candidates. This section won?t generally contain any information that would tip you off to possible identity theft.
Reporting and Repairing Inaccurate Information
Experts estimate that as many as 80 percent of credit reports contain inaccurate information at one time or another. This could be for several reasons: family members with similar names may have information appear on your report, people with similar social security numbers may have their information may appear on your report or you may be a victim of identity theft. So it?s important that you examine your credit report closely and often.
Each report will have its own report number (for each agency). Make sure you locate this number, and then call the credit reporting agency (or agencies) that reported the inaccurate information. Your credit report should list a specific number you are to call in the event that inaccurate information appears on your credit report. Explain that the account is not yours and that you want to dispute it. Then, follow up with a letter or completed written form and mail it certified with return receipt to all three agencies (even if all three agencies didn?t have the inaccurate information). The credit agencies will then have 30 days to investigate your case and fix the incorrect information. You will also need to contact the creditor(s) who reported inaccurate information to the credit reporting agency and explain the error.