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Decoding your credit report

Learn How to Read a Credit Report Step by Step, like a Pro » Learn How to Read a Credit Report Step by Step, like a Pro



We all have life goals that we want to achieve, which involve using credit, such as buying a house or a car, funding a college education, renting an apartment, or getting a credit card. To help achieve those goals, you may need to improve your credit rating, and that starts with knowing what’s in your credit report. Even if your credit is perfect, you need to fully understand what is in your credit file to avoid credit identity theft or errors. This guide explains what to do with your free credit report, how to read it, and what actions to take to clean it up.

What is a credit report

A credit report is a record of your credit activity and history. It will have records of your current and closed accounts, how timely you have been in paying creditors, and if you defaulted on any financial obligation, and if you have accounts in collections. Additionally, your credit report will have public records such as bankruptcies and foreclosures.

Your credit report may not contain your complete credit history. Accounts that are closed and paid off in good standing will generally remain on your credit report for ten years. Negative information can only remain in your credit report for a set time. Most negative items get removed after seven years.

The information in your credit report is used by creditors to determine your creditworthiness so they can decide to extend credit to you. The information can also be used by potential employers, government agencies, utility companies, landlords, and other entities within the scope of the Fair Credit Reporting Act.

It’s important to note that credit reports are not always accurate. Roughly one in three consumers have found errors in their credit reports.[2]

Understanding your credit report

More than half (54%) of consumers never checked their scores in 2019, according to a report in USA Today. [3]
This likely means they never checked their credit reports as well. One reason for that could be that credit reports can seem difficult to understand.

While your credit report may appear complicated at first, after you break it down section by section it will become much easier to understand. We’ll go over the sections of your credit report with in-depth descriptions.

Additionally, credit reports have codes along with identifying information for both you and the companies you have done business with. When you read over your report, you’ll want to understand what those codes mean and how they are used to record your credit history. You can also find a guide to those codes below.

Understanding your credit report is the first step to repairing your credit. When you understand and monitor your credit reports, you can increase your credit rating. In fact, 34% of subprime consumers who followed their credit raised their score to near-prime or above credit risk.[4]

How to read your credit report step-by-step

It’s essential to be able to read your credit report and understand the different sections in it. Below are the summaries of each area of your credit file. It’s important to note that each credit bureau will show this information in slightly different ways and some sections may overlap.

Identifying Information

What you’ll see

In this section, you should see your current and previous addresses, as well as current and past phone numbers. It will also show your Social Security number (last four digits only), as well as your birthdate and other personally-identifying information. It may also show aliases of your name if you have used different variations of your name on different loans or credit cards.

What you need to do

One of the first areas to check in your credit report is your personal information. Are your addresses and phone numbers correct and current?

TransUnion, Experian, and Equifax allow you to update your personal information – which you should do when you have a new address or other life change.  You’ll need to start or have an account with them to make these changes. Typically, that is free unless you choose to get some of their services.

You should also check the aliases that have been assigned to you. If you do not recognize an alias or have never used one that’s shown, it could be a sign that you’ve been confused with another consumer. This is important because you may have things like collection accounts mistakenly assigned to you.

Should you try to remove your old addresses and phone numbers?

Removing old addresses or phone numbers will not affect your credit score, according to Experian. [5] Unless you suspect fraud, you do not need to remove old information, as long as there are no errors.

Adverse accounts

What you’ll see
In this section, you will see accounts that have been closed by the creditor, are delinquent or have been sent to collections. Everything in this section is considered to be negative information, meaning it is likely to be decreasing your credit score.

What you need to do

Carefully read over the codes to make sure they are recorded as you paid them or are paying them if you made a payment arrangement. In other words, if you paid the collections in full, make sure it reads paid in full and not paid as agreed. Make certain the amounts are correct as well. Be sure the collections belong to you and are not a fraud.

You also want to pay special attention to when collection accounts should be removed from your credit report. Collections can only stay on your report for seven years from the date the account first became delinquent. Some collectors may try to attempt to re-age a debt, so it appears newer than it actually is. That means it would damage your credit longer than it should.

Should you try to remove adverse accounts?

You can’t remove factual adverse accounts unless they are out of date. If they are outdated or in error, you should dispute the accounts and remove them from your credit records.

The most effective way to dispute adverse accounts

Using written dispute letters to challenge adverse information in your credit file is more effective and provides better protection under the Fair Credit Reporting Act. These letters should identify you and state why the credit reporting agency or furnisher should remove the negative item from your credit file. You’ll need to supply evidence to support your case. We have free credit dispute letter templates that can help you craft effective letters.

Satisfactory accounts

What you’ll see.

In this section, you’ll see your accounts, previous or current, that are in good standing. It will list each creditor and typically show a high balance, account limit, and current account balance, along with a payment history showing how often you paid on time.

What you need to do?

You want to read over each account and make sure they are your accounts and that the amounts are accurate. If you see wrong amounts and missed payments, that could be a sign of an error or possibly fraud.

Should you try to remove satisfactory accounts?
You can’t if they are accurate, and there is no reason to do so. It’s a positive record on your credit report.

Public Records

What you’ll see

This section comes from your public records and includes bankruptcy and foreclosures. In the past, liens were included; however, that ended in 2018.[6] Although liens are no longer recorded in your credit report, the creditor can still file payment information on your report, and that could damage your scores in some credit scoring models. Divorce is also a public record but is not included in credit reports. Credit reporting agencies cannot list marital status. The results of a divorce, including splitting up accounts, can affect your credit score.

What you need to do
If there are any inaccuracies in your public records, you should get them corrected as soon as possible, and if the credit bureaus made an error in recording them to your file, you should ask them to fix it.

Should you try to remove public records?
Because they are public records, you cannot remove them unless they are outdated. You should remove anything that has an error. Chapter 13 bankruptcy and foreclosure will remain on your credit report for seven years; Chapter 7 bankruptcy will remain for 10.

Credit Inquiries

What you’ll see

In this section, you’ll see two types of credit inquiries. Both “hard” and “soft” inquires will be listed here. Hard inquiries happen when you apply for new credit and will affect your credit score. Soft inquiries happen when creditors send you pre-approved credit offers, when you check your own credit, and for credit checks that don’t involve getting approved for credit, such as employment checks. Using a credit freeze will not stop soft inquiries.

What you need to do

Make sure you have initiated any “hard” inquiries. You can spot fraud if you see “hard” inquires that you did not ask for. Read over all the companies that are listed here.

Should you try to remove inquiries?

As long as the hard inquiries are legitimate and not the result of identity theft, they cannot be removed. Hard inquiries should drop off your report after two years. If you see a hard inquiry after two years, you should dispute it and get it removed. Soft inquiries do not affect your credit score and are not seen by potential creditors.

How your three credit reports differ from one to the next

Many people will order their credit reports and wonder why there are three credit reports and why they have differences. One of the main reasons for the disparity is that not all creditors report to all agencies. The result is that your credit data may not be the same in all three major agencies.

Another main reason is that while the three major >credit bureaus have similar business models, they are separate businesses. They report and record information differently and do not share information, so their data about consumers does not always match.

Some of the significant differences that you’ll see on your credit report include:

Reporting codes

Different credit reporting agencies will assign different codes to the same actions. For example, being 30 days late in an Equifax report will result in a recording of a “2” next to the account in question, but you’ll get a “1” with Experian. You can find a helpful table with these codes below.

How accounts are listed

Equifax lists your accounts by ‘open’ and ‘closed,’ which can make information easier to find. Experian and Transunion list them in alphabetical order, regardless of the account status.

Drop off dates

Experian will tell you when accounts will be deleted from your record. The other two credit bureaus do not provide this information


TransUnion generally has the most accurate employment section out of the three credit bureaus. However, even TransUnion will only list certain information. By law, credit reports do not contain income information.

Credit report payment history codes

When viewing your credit report, you’ll see multiple codes on the same account. For example, you’ll see a date when an account was opened, how many days late the account is, and so on. Each of the three credit bureaus has its own unique codes. The tables below outline the most common codes you will see from each credit bureau.

Equifax credit report codes and definitions

Final statusShows the final status of the account, which can be: closed, paid, refinanced
FIRM/ID CodeName and customer number of reporting company; an asterisk indicates trade information is from an automated data supplier.
RPTDDate item was reported; most customers report information monthly.
OPNDDate account was opened.
H/CHigh credit
TRMMonthly repayment accounts
BALBalance owed as of repayment date
P/DPast due amount
CSType and status of an account
MRMonths reported to a credit bureau
ECOACode indicates account owner
Account numberTruncated to ensure privacy complete account numbers are not listed
DLADate of last activity
OOpen account (30 days or 90 days)
RRevolving or option (open-end account)
IInstallment (fixed number of payments)
CLine of Credit
MMortgage Manner of payment (North American Standard account ratings).
0Too new to rate; approved but not used.
1Pays (or paid) within 30 days of payment due date or not over one payment past due.
2Pays (or paid) in more than 30 days from payment due date, but not more than 60 days, or not more than two payments past due.
3Pays (or paid) in more than 60 days from payment due date, but not more than 90 days, or not more than three payments past due.
4Pays (or paid) in more than 90 days from payment due date, but not more than 120 days, or four payments past due.
5Account is at least 120 days overdue but is not yet rated “9.“
7Making regular payments under a consolidation order or similar arrangement.
8Repossession (voluntary or involuntary return of merchandise).
9Bad debt; placed for collection; skip.

Download a complete list of codes from Equifax »

Experian credit report codes and definitions

AActual (Payment types)
SScheduled (Payment types)
 25 Month Payment History
130 days past the due date
260 days past the due date
390 days past the due date
4120 days past the due date
5150 days past the due date
6180 days past the due date
0Current with zero balance reported on tape
No history reported that month
BAccount condition change
JVoluntary surrender

Download a complete list of codes from Experian »

TransUnion credit report codes and definitions

AActual (Payment types)
SScheduled (Payment types)
 25 Month Payment History
130 days past the due date
260 days past the due date
390 days past the due date
4120 days past the due date
5150 days past the due date
6180 days past the due date
0Current with zero balance reported on tape
No history reported that month
BAccount condition change
JVoluntary surrender

Download a complete list of codes from TransUnion »

Credit report laws

The Fair Credit Reporting Act, is a Federal Law that took effect in 1971 and was set up to make sure that that credit reporting agencies treat consumers fairly and keep information private. It is also the law that allows consumers to get their credit reports for free at least once per year.

The Credit Repair Organizations Act protects consumers from false advertising from credit repair companies and makes sure consumers are fully informed when they make decisions to use a company to repair their credit.

Potential changes to current credit report laws

There are two potential major changes to how credit is reported and used that are being discussed by the federal government. Neither has been made into law yet, but if they are they could have a huge impact on consumer credit reporting.

The “National Credit Reporting Agency Act” would replace or supplement the three major credit bureaus with a government credit registry, which the Consumer Financial Protection Bureau would run. Other ideas being considered as part of the law would:

  • ban the use of credit scores for most employment screenings
  • lower the time negative information stays on your report from seven years down to four years
  • delay medical debt recording
  • allow for extra protections for COVID-19 victims

The “Protecting Your Credit Score Act” plans to make it easier for people to review their credit scores with a main website where they can access their scores along with their reports. They could also quickly freeze their accounts or dispute mistakes through the one website.

Proponents of this type of change are being heard in Congress. Chi Chi Wu, an attorney with the National Consumer Law Center and an advocate for changing the current system, spoke recently to the House Committee on Financial Services. He stated, “While public agencies are not perfect, at least they would not have profit-making as their top priority.”

The Chair of the Committee Maxine Waters (D-Calif), added, “Good credit is a gateway to wealth.”

However, the proposed legislation is not without opposition. Consumer Bankers Association President and CEO Richard Hunt stated, “Initiating a significant change to the current credit reporting system has the potential to severely limit credit access for those consumers in need.”


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