Six Confusing Things About Your Credit Report & What They Mean

If you’re not used to reading them, credit reports can make about as much sense as a restaurant menu printed in a foreign language. At least in a restaurant, you can point to what someone else is having. But if you don’t know how to read your credit file, you could make mistakes that could lead to your financial life being harder than it needs to be.

Here are some common misinterpretations people make about their credit reports and how to avoid them:

They have too many student loans listed for me

When student loans are listed on credit reports, they’re often broken up into individual loans for each semester you took out a loan. Of course, you’ll still want to make sure all the loans are yours, but don’t be surprised if you see a lot of loans listed under the same provider.

I must be a victim of ID theft because someone else’s name is on my report

When companies like Equifax, Experian and TransUnion compile your information, they look to gather all financial information being reported for you. In doing so, they may accidentally confuse you with someone with a similar name or other bit of identifying information. This can result in that person’s name, address, date of birth, Social Security number, etc. being mistakenly listed on your credit report. You can always have this kind of information removed from your credit report by disputing the information at the website of the bureau that is listing the information. You can access the website for the individual bureaus listed above by simply adding “.com” onto the name of the credit reporting agency.

I paid that collection account, it shouldn’t be on my report anymore

Collection agencies aren’t required to remove a collections account from your credit report once you’ve paid it. All they’re required to do is list that the account has been satisfied. Negative accounts like these stay on your credit report for seven years from when the account first went delinquent with the original creditor, whether they’re paid or not.

My credit score is missing

The credit reports we’re all entitled to by federal law – available at annualcreditreport.com or by calling 877.322.8228 – don’t come with a credit score. There’s currently no law that automatically provides everyone with a free score. FICO is the company that provides the score most commonly used by lenders. You can purchase a score from them at myfico.com.

My date of birth and address are part of lending decisions

When you access your credit reports, you’ll see that some of your personal information is listed in addition to your financial data. For example, the report may list where you live, when you were born, and who you’ve worked for recently, among other things. You needn’t be worried this is being used against you when a potential lender is looking at your reports, though. It’s illegal for a lender to use age or address when making lending decisions and these pieces of information aren’t calculated into your FICO credit score.

All these inquiries count against my score

When someone other than you looks at your credit report, it results in what’s called an “inquiry” being put on your credit report. If you’ve ever looked at credit reports, you may know there can be a whole lot of them listed at any one time. Keep in mind the only inquiries ever factored into your credit score are ones that happened in the past year (even though they stay on your credit report for two years) and the ones that were for the purpose of you applying for credit or financing some other type of financial contract. The other types of inquiries aren’t counted against you.

This information was brought to you by the financial fitness counselors at BALANCE. We partner with BALANCE to provide our members with financial counseling and education to help achieve financial independence. Whether it’s reducing debt, buying a home, retaining a home, improving money management skills, or simply finding out how to get a free copy of your credit report, BALANCE can provide guidance every step of the way. Best of all, we pay for this service as a free benefit for SCE FCU members.

Call BALANCE at 888.456.2227 or visit scefcu.balancepro.org for more information. Remember to let them know you’re an SCE FCU member, so you’ll receive their counseling services at no cost to you.