Mastering FICO Guide Overview

We've all heard it, monitoring your credit and having a high credit score is very important. But, when was the last time you checked your credit report? Do you understand what raises and lowers your FICO score? Do you even know what a FICO score means?

Take a look at the bar chart to the left. Notice that the interest rate on a mortgage is almost 3.5% lower for people who have excellent credit.

3.5% may not sound like very much, but it is. For a standard, fixed rate 30 year mortgage, the total interest paid would be $340587.60 at 5.892%. At 9.289% that total balloons to $592404.00. That's a 1/4 million dollar difference!

Saving money is not the only reason to have good credit. Many employers are now checking credit history and using it in the hiring process. Automobile and life insurance companies are using FICO scores when figuring your monthly payments!

How To Read A Credit Report is part 1 in Top Internet Guide's new Mastering FICO series, where we explain everything you need to know in order to manage your credit.

Sample Credit Report

The best way to learn to read your credit report is to look at an example. In the next sections, we'll show you how to best utilize each section of the full credit report.

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Guide Navigation

1. Summary Report
2. Personal History
3. Derogatory Credit Information
4. Full Credit History
5. Credit Inquiries

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Credit Report Summary

The first page on most credit reports is actually not your credit score (in fact, you usually have to pay more to see your actual score). Rather, it is a summary of all of the information contained within the detailed credit report. Below the picture we have provided a key that describes each of these numbered points in the summary.

When reading your credit report, be sure to confirm that the name, address, and DOB is actually yours. If any of this is wrong, it means the credit reporting agency has your information wrong, or it could be a sign of identity theft.

The summary section (3) lists the different types of credit accounts, whether it be a mortgage (real estate), credit cards (revolving), installment (personal loans), or other. Next to the type of account, you can see how many of those types of account you have open, the total balance of accounts, the minimum monthly payment, whether the payment is current, and if the account is till opened or if it has been closed. Remember, when reading your credit report it contains all of your credit history.

In the 24 month history, the green check boxes denote an on time payment was made. A red 30, 60, or 90 means the payment was 30,60,or 90 days past due.

1 - Personal Information
Check to see that your name, current address, former address, and date of birth are correct.
2 - Reference Number
Refer to this number when making inquiries.
3 - Report Summary
Sums up current credit accounts and balances, and notes delinquent or overdue amounts.
4 - Credit Reporting Agency
Indicates which of the three main credit reporting agencies (Equifax, Experian, transUnion) reported the information.
5 - Account Type
Shows the type of account (Real Estate, Installment, Revolving and Other).
6 - Count
Shows the total number of accounts reported for each type of account.
7 - Balance
Shows the total balance of all types of accounts.
8 - Payment
Shows the total account type payments.
9 - Current
Shows the total number of current accounts.
10 - Closed
Shows the total number of accounts reported closed.
11 - Inquiries
Shows the total number of inquiries about your credit that were reported. (Inquiries may be made by banks, department stores, employers, and landlords).
12 - Public Records
Shows the number of matters of public record (court records of bankruptcies, tax liens, judgements or foreclosures, etc.) reported by the credit reporting agency.
13 - Collection Accounts
Shows the number of accounts turned over to a collection agent, as reported by the credit reporting agency.
14 - Delinquency
Shows the number of accounts that are currently delinquent or derogatory, or were previously delinquent or derogatory.
15 - Derogatory Information
Shows the delinquent/derogatory information that has been reported by the credit reporting agencies.
16 - Account Information
The creditor with whom you have or had an account with, the account number, and type of account.
17 - Bureau Code
Is the designation as to who is responsible for each account and the type of participation for that account, as follows:
 

U Undesignated: Not designated by the creditor
I Individual:Individual account
J Joint:Joint account
A Authorized User:Authorized to use someone else?s account
S Shared:Shared joint account
C Co-Maker:Joint responsibility for the account
B Co-Signer:Responsibility only in case of default on the account
M Maker:Individual account
T Terminated:Closed account

18 - Date Open
When the account was opened.
19 - High Limit
Your credit limit, or the most you have ever charged on the account.
20 - Monthly Payment
Your monthly payment on accounts.
21 - Account Balance
The balance you owe, as of the date the information was obtained.
22 - Last Reported
The last date the account was updated by the creditor.
23 - Account Status
Indicates whether the account is current or past due.
24 - Amount Past Due
Shows the total past due amount for all accounts.
25 - Credit Reporting Agency
Indicates which of the three main credit reporting agencies (Equifax, Experian, transUnion) reported the information.
26 - Days Past Due 30/60/90
Any balance that is past due will appear in the Past Due 30/60/90 amount columns. Past Due 30/60/90 indicates the number of times an account was overdue 30, 60 or 90 days within the past seven years.
27 - History Date
Date at which current history begins.
28 - 24 Month History
For chronological reference. Indicates whether the account was current or past due on a month-to-month basis over the last 24 months - including the date shown under "History Date."

 

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Personal History

Your personal information including address and employment history is contained in this section of your credit report. Take a few minutes to make sure that all of your mailing addresses, as well as employment history is correct. Any missing, additional, or incorrect information should be addressed by contacting the credit bureau.

 

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Derogatory Credit Information

This piece of your credit report shows all of the information that negatively impacts your overall credit score. In the example credit report below, you will several instances of credit cards that were closed as part of a bankruptcy. You can also see that the WaMu account has a 30 day late payment.

If you have any collections against you, you will also see those in this part of the report.

How To Use Derogatory Credit Report Information

First, make sure all of the marks against you are correct. If your report shows a late payment that you can prove wasn't late, that can really help your credit score. If there are any collections against you that you were unaware of, pay those off or dispute them if they are false.

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Credit History Information

Your credit history report looks very similar to the derogatory information report. That main difference here is that any type of credit you have ever had is contained within the credit history report. Let's take  a look at the details (I'm going to skip the obvious ones):

Bureau - It is important to know that there are 3 different credit bureaus; Experian, Equifax, and TransUnion. When you review your credit report, you should definitely get reports from all 3 bureaus.

Bureau Code - The type of account (individual, joint, etc).

Last Reported - This is the last time the credit account reported information to the credit bureau.

When you read the credit history report, make sure that each of the accounts is indeed a credit card, loan, or other form of credit for which you have applied. Any accounts not opened by you could be a sign of identity theft.

Also, take a look at the Account Status for each of the accounts. If you have open accounts that you are not using, make sure the account status is paid. Make sure all accounts that you have closed or paid off show that in the account status, as this has a significant impact on your FICO score.

 

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Credit Inquries

The inquiries portion of your credit report shows the number of times creditors have "pulled" your credit in the past 2 years.

Important Credit Inquiry notes:

1. Ensure all of the inquiries were executed with your knowledge. Any inquiry that seems suspicious should be investigated as falsely acquiring credit is a significant sign of identity theft.
2. Try to keep the number of credit applications you fill out to under 5 per year. A high number of inquiries is a flag to most creditors and reduces your FICO score, particularly if other creditors have already turned you down.

 

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