Do you know how to read your credit report?

Don’t let profile changes or new identity theft scams catch you off guard!

Your credit report basically serves two very important purposes. First, it provides a comprehensive look at your life as a borrower. It shows payment history, account statuses and even public records that are relevant to your financial life. Creditors and lenders base approvals on what your profile says. The secondary purpose of your report is that it allows you to look at your own history. An annual review is an essential step in catching identity theft. If someone opens an account in your name, you will see it on your credit report. So, it’s often you main line of defense against things like social security ID theft. The articles below help you understand what your credit report says and how to use it to your advantage. You can also scroll down to the bottom of the page to find more tips on how to use your credit report effectively.

10 things to look for when you review your credit report

By law, every consumer can receive a free copy of each of their credit bureau reports once every twelve months. That’s a specific stipulation in the Fair Credit Reporting Act. There’s actually a government website where you can download your reports for free, no strings attached. Just visit, answer a few questions to verify your identity and download your reports.

Then, look for these issues…

#1: Aliases that aren’t you

Most people skip over the personal information section at the top of each report. You just verified your identity, so why does it matter? One word: aliases.

Your credit report lists all the aliases that the credit bureau recognizes as you. So, if your name is John Smith, your aliases may be John K. Smith or Jonathan Smith or any number of combinations.  Basically, it’s all the “as your name appears on the card” variations.

What you want to look for is aliases that don’t appear on any of your loan agreements or credit cards. For instance, in the example above, maybe one alias is John Kenneth Smith, but your middle name is Kevin. This means you’ve been confused with another credit user, which can be extremely bad.

If this happens, contact the credit bureau directly to ask them to remove the incorrect alias. You don’t want someone else’s bad credit habits appearing on your report!

#2: Make sure missed payments were missed

Billing issues can turn into bad remarks on your report, which can drag down your score. A payment missed by more than 30 days becomes a negative remark that sticks around for seven years.

Make sure all your missed payments were truly missed. For example, let’s say your mortgage lender requires hazard insurance and your insurer doesn’t send the paperwork promptly. The lender may assess a higher payment and if you have Auto Pay set up, you may miss the increase. The lender reports a missed payment, even though you paid on time. Once you get the insurance worked out, any missed payment should be removed. Make sure they are.

#3: Outdated account statuses

The credit bureaus also keep track of the status of your account. If you’re behind with your bills or the account is charged off, it’s reflect in your credit report. If you get into financial distress and then recover, make sure your account statuses are up to date. Your report should list your accounts as open and current,

#4: Duplicate accounts

Sometimes errors occur in credit reporting that duplicate an existing account. So, instead of one mortgage account, your report lists two identical loans. This does not appear as a negative remark on your credit profile. However, it does affect your ability to qualify for new credit and loans. Duplicated accounts throw off your debt-to-income ratio, making it harder to get approved.

#5: Accounts you didn’t open

If you see a loan or a credit card that you don’t recognize, it could be a sign of Social Security identity theft. It often reveals that someone used your Social Security number to open a new account in your name. Any account opened in your name without your authorization can be closed with a call to the creditor or lender. Then, you may want to place a fraud alert on your report, in case the thieves open any other accounts.

#6: Collection accounts that don’t belong to you

This often relates to mistaken aliases mentioned in the first tip. Collection agencies often have little information to go on as they hunt down debtors who don’t want to be found. This often leads to a collector assigning a debt to a credit user, even if it’s not theirs.

Make sure that any collection accounts listed in your report are yours. Otherwise, you will need to contact the collector to inform them that they have the wrong person. Once you correct the mistake with the collector, make sure they reported the account removal to the credit bureaus.

#7: Incorrect public records

If you owe court fines, alimony, child support or any other court-ordered settlement, it will appear in your profile. Just make sure that all public records assigned to you are yours and legitimately owed.  If not, you may need to head to the Clerk of Courts to get the information corrected.

#8: Account closures

Accounts can be closed because there are issues with it or because you let it be inactive for too long.  Account closures happen when there’s issues with theft, when you pay the debt off and close the account or for other reasons.  In some cases, you simply waited too long to make a charge and the creditor closed the account because you never use it.

Make sure you are aware of all account closures and that they are correct.

#9: Hard inquiries you didn’t authorize

When creditors and lenders run credit checks during applications or underwriting, it creates a hard inquiry in your profile. Too many hard inquiries within a six-month period can decrease your credit score.

Make sure that you authorized all hard inquiries made on your report. Soft inquiries for things like preapproved credit offers don’t count. A number of hard inquiries in your name that you didn’t request could be a sign of ID theft, too.

#10: All the good stuff

Negative information can only stay in your report for set amounts of time. Positive or neutral information sticks around forever. It also offsets the bad stuff. In fact, the “weight” of a negative item decreases over time, even before the penalty clock expires. So, positive actions that you take now can quickly offset negative items that occurred last year or years prior.

Review all the good stuff in your credit report to make sure you’re on track. If you see you don’t have much good to offset the bad, take steps to rebuild your credit.