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How to read a credit report to obtain better credit rating.
A credit report is basically divided into four sections:
 identifying information
credit history
public records
and inquiries.
 Identifying information is just that -- information to identify you. Look at it closely to make sure it's accurate. It's not unusual, for there to be two or three spellings of your name or more than one Social Security number. That's usually because someone reported the information that way. The variations will stay on your credit report; If it's reported wrong, it's left that way because it might mess up the link. Don't be concerned about variations.
Other information might include your current and previous addresses, your date of birth, telephone numbers, driver's license numbers, your employer and your spouse's name.
The next section is your credit history. Sometimes, the individual accounts are called trade lines. Each account will include the name of the creditor and the account number, which may be scrambled for security purposes. You may have more than one account from a creditor. Many creditors have more than one kind of account, or if you move, they transfer your account to a new location and assign a new number. The entry will also include:
When you opened the account
The kind of credit (installment, such as a mortgage or car loan, or revolving, such as a department store credit card)
Whether the account is in your name alone or with another person
Total amount of the loan, high credit limit or highest balance on the card
How much you still owe
Fixed monthly payments or minimum monthly amount
Status of the account (open, inactive, closed, paid, etc.)
How well you've paid the account
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On Experian's report, your payment history is written in plain English -- never pays late, typically pays 30 days late, etc. Other comments might include internal collection and charged off or default.
Charged off means the creditor has given up, thrown in the towel, He's made efforts to collect and written it off.
Other reports use payment codes ranging from 1 to 9; an R1 or I1 on a report is an indication of a good payment history on a revolving or installment account.
The next section is the part you want to be absolutely blank. The public records section is never a good story. If you have a public record on there, you've had a problem. It doesn't list arrests and criminal activities; just financial-related data, such as bankruptcies, judgments and tax liens. Those are the monsters that will trash your credit faster than anything else.
The final section is the inquiries. That's a list of everyone who asked to see your credit report. Any time anyone gets into the report, it'll post an inquiry, If you call the credit bureau and ask for a copy, it will be on there. It's a very detailed entry record. It's great for the consumer. Inquiries are divided into two sections. Hard inquiries are ones you initiate by filling out a credit application or taking your child to the orthodontist. Soft inquiries are from companies that want to send out promotional information to a pre-qualified group or current creditors who are monitoring your account. You may have heard that a large number of inquiries can have a negative impact on your credit score, but you're probably OK. The vast majority of inquiries are ignored by the FICO scoring models, They're not the steak in the steak dinner.
For instance, the model has a buffer period that ignores inquiries within 30 days of getting a mortgage or a car loan. It also counts two or more hard inquiries in the same 14-day period as just one inquiry. You could have 30 in two weeks and it only counts as one.
If you find a mistake on your credit report -- an account that isn't yours or a disputed amount -- you'll need to fill out the form that comes with the report, or follow the instructions on the explanatory sheet.
The process takes time because the creditors have 30 days to respond to a charge of a discrepancy. As long as a charge is in dispute, that dispute will show up on your report. Long-time lenders say it's common for reports to have errors. Some estimate that as many as 80 percent of all credit reports have some kind of misinformation.
Part Two: Hypothesis of how credit scores are formulated...
What do all those abbreviations and codes in a credit report mean?
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