Over the last couple months I’ve had several conversations with clients about what is on and what is not on their credit reports. Last week after eavesdropping on a conversation at the airport, I realized that some people are simply unaware what’s actually on their credit report. So let’s get back to basics.
At the beginning of your actual credit report is a section with your personal information such as your birthdate, name, and any former(maiden) names. Your childhood nickname is NOT on your credit report. Sorry Man-Man, June Bug, and Big Daddy. The last 4 digits of your social security number should be displayed along with your current and former addresses, employers, and even telephone numbers. Your credit score is not on the report that you receive from www.annualcreditreport.com. If you fill out an application for a mortgage, car, bank loan etc. and review that credit report, it will contain your credit score.
Twenty-seven percent of credit consumers have never seen their credit report so the credit bureaus give you a brief tutorial of how to read the report. The bureaus generally cover how you can determine missed payments, late payments of 30, 60, 90 days or more for a 24 month period, credit limits, balances, how long the account has been open, and if the account is currently open or closed.
Generally, your credit report begins with credit challenges you’ve had in the past or currently. Here you will find bankruptcies, judgments, collections, repossessions, wage garnishments, and state/federal tax liens just to name a few. Next, depending on which credit report you are viewing, you will find the credit accounts you currently have or older closed accounts. Again, depending on which bureau, your accounts could be clustered by date opened or closed or by account type. An account type would list, for example, your student loans one by one, current and closed mortgages. The same holds true for car notes, bank credit cards, and store credit cards. TransUnion even lists the date a particular account, good or bad, will be removed from your credit report. Deciphering the report can be complicated, but with a little patience and diligence, I am positive you can figure it out.
So…what’s not on your credit report? Before I begin, there is a caveat to what I’m about to say: These items are NOT on your credit report IF you have never had a collection or judgement regarding them entered against you.
Your cable bill is not in your credit report. Neither is your utility bill, water bill, pay day loan, cell phone bill, home phone, rent, and not even your overdrawn bank account. Secure cards are on your credit report, and they are a great way to help establish credit if you utilize them responsibly. Cards such as the RUSH card, commonly known are prepaid debit cards, where you can load cash or your paycheck onto it and use it like a debit card are NOT on your credit report and do not help you establish a positive credit history. As a side note, the idea of including prepaid credit cards to help judge creditworthiness has been presented but currently the 3 major credit bureaus have not decided to add them to the mix of options. In addition, using your pay history with utilities, cable and phone bills is being considered to help those that have a hard time establishing credit. Although these items are not currently used to rate your creditworthiness, it’s important to pay for the services you use on time.
You may be wondering how can a small collection account damage my credit score. Let’s take cable for example. If you have a collection item from a major cable company, no matter how big or small the amount, it will decrease your credit score significantly. A collection means the company you owe tried for months to collect, and you did not pay, so they had to refer you to a professional collection agency. This negative activity follows you for up to 7 years whether you pay or not. Not only do you lose points, what if you move or change cable companies? If you return as a customer, you’ll have to pay what you owe from the past in addition to a security deposit or be forced to enroll in autopay. As you can see neglecting that last cable bill may “save” you some money today, but cost you more in the future. Other cable companies will also review your credit history and see the unpaid cable bill and decide to require a down payment to them as well. In the long run, it’s best to close out the cable account with a zero balance.
As a final disclosure, I may have missed a type of account that is or isn’t on your typical credit report. The lists and examples contained in this article are not exhaustive although I try to be as thorough as possible. If you have questions about what’s on your credit report or would like to add to the above list, please leave a comment on this article. You may be helping someone gain knowledge and reach their goal of Credit Swagger. As usual, stay tuned…come back for more great reads about your credit score.