Structure of a Credit Report

Recently it is seen that more and more consumers in US lack familiarity with the structure of a Credit Report. As a result they fail to understand which part of the report can affect their financial stand points. Once a thorough understanding of the content of every part of a credit report is gathered, a consumer can move ahead with the endeavor of improving the credit score.

A comparative study of the credit reports issued by Experian, Equifax and TransUnion, the three most prominent Credit Bureaus in America, shows that the content of these reports are nothing but indicative of the economic strength and weaknesses of the consumer. It also helps the creditors and employers to have a fair idea about the repayment behavior as well as the financial growth potentials of the applicant.

To be precise, a Credit Report is composed of the following 8 sections:

1. Consumer Details
2. Summarized Profile
3. Tradelines
4. Fraud Indicators
5. Collection Details
6. Latest Inquiries
7. Public Record Information
8. Credit Scores

Consumer details lists down all the basic information about the consumer starting from his full name, present and earlier residential addresses to SSN, date of birth etc. This part of the credit report also focuses on the employment details of the consumer. This is especially useful for the employers to know more about the authenticity of the applicant.

Summarized profile, on the other hand, focuses on the information related to credit. Everything from total financial liabilities under different heads, like revolving balance to real estate, to total tradelines is listed. This part of the credit report tallies the total income and expense of the consumer to help creditors decide on approving loans.

Tradelines forms a separate and most crucial part of a Credit Report. A comprehensive listing of all the creditors to whom a consumer owes money, is listed. Vital information like type of loan, total loan amount, co-signer details etc. are also given. A special emphasis is given on the payment pattern during the last two years for better understanding of creditors.

The presence of Fraud Indicators section in a credit report adds to its authenticity and usefulness. After checking the personal information provided by the consumer with their own database, Credit Bureaus lists the discrepancies to make creditors and employers aware of the intentions of the applicant.

Collection Details section is applicable for those consumers who doesn’t bother to pay back loans on time and thus their accounts are passed on to collection agencies by Creditors. Any credit report that is marked “collection” in this section is said to be negative as it puts a question mark on the seriousness of the consumer.

Latest inquiries section lists the inquiries that were made by creditors and employers for a particular consumer during the last 2 years. This section has got direction link with the credit score. The more number of inquiries the lesser is the credit score as it shows that people are not very sure about the creditworthiness of the consumer.

Public record information is another decisive factor behind credit scores. This section lists bankruptcy information, monetary and non-monetary judgments, tax liens etc. This is of utmost importance to creditors as they may not be willing to loan a person who declared bankruptcy before and have higher risks in terms of repayment.

Summing up all the above mentioned points, credit scores form the crux of credit reports. In short, it is a just a number that helps creditors to weigh risks of loaning to a consumer. The parameter on the basis of which the score is assigned is clearly stated in this section, by the credit bureaus.Once you are thorough with your credit report and know the implications that each section may have, it becomes easier to plan your financial goals and thereby achieve a blemish-free credit report.