Credit Report 101: A Beginner's Guide to Reading & Disputing!

Hey, credit heroes. Are credit reports giving you a headache? Well, today I'm going to break down how to read, understand, and master them with confidence. So you better stick around. My name is Daniel Rosen, and welcome to Credit Repair Business secrets. In the 20 years since releasing my first credit repair software, I have helped thousands of businesses to build from the ground up. And during that time, I've experienced the very same challenges that credit heroes face. And I've learned proven ways to overcome them and succeed. Like most of our credit heroes, the first problem that I faced was the most difficult because my whole financial future was at stake. A bank error didn't just hurt my credit score, it destroyed my life. I learned the hard way that if you don't monitor your credit and review your credit reports regularly, you can miss any errors and other suspicious activity. Now, back then, there wasn't a community of credit heroes to answer my questions or credit repair software to speed up the process. So I had to fix the problem myself. And I learned what many of you already know. The credit system is corrupt, the dispute process is slow, and credit reports are designed to confuse you. Eventually, I was able to fix the issues on my credit report and and rebuild my life. But I learned a huge lesson. It doesn't matter who you are in your relationship to credit, learning how to read and understand credit reports is a skill that can change your life. Here's how this relates to us. For those of you who are new to credit repair, credit scores get all the attention, but credit reports do all the work. They contain everything from your personal information and account history to collections and public records. In other words, credit reports tell your financial story. Unfortunately, they don't always tell the truth. An unbelievable 79% of credit reports have errors. And those errors can totally destroy your life. Like they did to me. So who's behind these credit reports? Well, they are built and maintained by reporting agencies like Equifax, Experian, and TransUnion, who are the three main credit bureaus. But don't let their official sounding title of bureau fool you. These are not government organizations. No, they are for profit companies. So if you want to be able to fight back against the system and dispute these errors and win, your credit report holds the keys. Here's a thing to remember. The CFPB recommends that you check your credit reports at least once a year. But credit profiles are updated at least once a month. So if you're serious about repairing your credit or running a credit repair business, checking reports regularly is essential for your success. You can request copies of your credit reports as often as you want without hurting your credit. Because when you pull your own report, it's considered a soft inquiry. If you don't already have copies of your credit reports or know how to request copies of your reports, you're entitled to one free report from each of the three main credit bureaus every 12 months. In fact, due to all the financial hardship resulting from the pandemic, you can actually get a free credit report each week through the rest of 2023. All you have to do is go to annualcreditreport.com fill in the short request form, choose which report you want to start with, and then repeat the process for all three bureaus. The only catch is these free credit reports do not include credit scores. Federal law gives you the right to a copy of your credit report, but credit scores are calculated by the bureaus when they plug your information into their formulas. It's why you have three unique credit scores. So if you want your credit reports with credit scores from all three bureaus, you can instantly get all of that for $1 when you sign up for a seven day trial of Credit Hero SC at creditheroscore.com here's why this is important. If you want to learn how to read credit reports like the back of your hand and dispute errors faster, then open up or print out a copy of your credit report right now because I'm going to walk you through a full three bureau report. Trust me on this, the fastest way to learn something is through experience, especially when the results impact you directly. Sure, software tools are making it faster and easier to read credit reports, but if you don't understand the fundamentals of a credit report, you won't really know what you're doing. Any progress you make might just be temporary. This is doubly true if you're running a credit repair business. Whether a report lands in your inbox or gets handed to you in person, you need to be able to read it on the fly. You need to be able to understand it and and provide actional feedback. If you can't, then you aren't taking your craft seriously enough. The good news is, by the time we're done, you're going to have a better understanding of how to read credit reports and it's much easier than you think. If you need a second to pull up your credit report, hit pause, take a breath and get ready to take notes. Now there are two primary types of reports, single bureau and three bureau. If your report is divided into three sections with the scores on the Top and each of the three bureaus listed side by side. That is a three bureau report and that's the kind we have at CredithHero. Score. Three bureau reports are the easiest to read and they're the best for credit repair businesses. Their layout lets you quickly compare information and spot discrepancies, giving them an edge over the single bureau reports. But don't worry, if you're only working with a single bureau report, everything I say still applies. It just might take longer for you to cross check all the details. Now if your report uses slightly different wording or if it's arranged in a slightly different way, that's fine. All reports have the very same basic credit score, personal information, risk factors, account summary, account history, inquiries, collections, public records, creditor contacts, and consumer statements. Now, quick reminder, if you are reading a free credit report, it won't have the credit scores. But most of the new reports will. Alright, let's dive in. Section 1 credit scores the credit score section is pretty self explanatory. Each bureau score is listed along with the range that it falls under, like poor, fair or good. Some reports, like the ones from Credit Hero Score, include score updates, points gained or lost, and graphs that track change over time. The only error you might find in this section is if one of the scores is missing. And this usually means that you don't have enough qualifying information to generate a score. And you can fix that by contacting the credit bureau or building more credit. Personal Information in the personal information section you'll find names, aliases, date of birth, Social Security number addresses and employment information. The first step of any credit dispute process is to go after the low hanging fruit. And the personal information section is notorious for errors. Those errors are often tied to negative information on your credit report. Now you might see a lot of crazy stuff in this section because every time you apply for credit, the person who's typing in all your information, whatever they're typing, goes directly into here and they make a lot of mistakes. So if you find any misspelled names, incorrect dates, birthdays, Social Security numbers or addresses that you don't recognize, you should dispute them. Also, if you see names or addresses that you don't recognize, that can be a sign of identity theft, so dispute them immediately. Section 3 risk factors now depending on the source of the report, the next section is a breakdown of risk factors and red flags found in your report. Not all reports include this section, but if you ever get turned down for credit, the risk factors section usually holds some clues as to why the risk factors are usually listed in order of importance, they can be extremely serious and detrimental to your credit, like too many unpaid accounts and collections. Or or they can be simple things that are easy to fix like lack of credit history section 4 account summary the Account Summary section is a snapshot of everything inside your report. It includes the total number of open and closed accounts, delinquent accounts, collections, and derogatory items. It also lists the combined balance, monthly payments, public records, and inquiries. This section serves as a quick reference point, making it easier to cross check and confirm that all three bureaus are reporting the same information. If they're not, that's when you know you need to dive into more detailed sections below. Section 5 Account History the account history usually comes next, and it's by far the largest portion of your credit report. This section details everything about your lines of credit, both open and closed accounts. With each account you'll see the the type of account, whether it's a credit card, student loan, etc. The account name and number the account standing the account balance and credit limit the account status whether it's open or closed the date the account was opened the date of last activity who is responsible for the account, whether it's an individual or joint Any remarks, statements or comments attached attached to the account the number of late payments, if any the high balance which is the total amount borrowed the monthly payment amount the current payment status the amount past due the name and address of the creditor on the account and a calendar of the account payment history, a month to month and year by year list showing whether the account was paid on time past due in collections, charged off in bankruptcy, etc. Now, I know that was a lot to take in, but each line of these accounts needs to be verified as accurate. If you find a discrepancy at any point, you should investigate it further. For example, if Experian marks a credit card account is closed while Experian says it's open, then you know something is off. One of them is providing incorrect information and it must be disputed. Similarly, if the date opened or the date of last payment doesn't match between each bureau, then one of them is providing incorrect information and that can be disputed too. However, you can't just point out that the bureaus are providing inconsistent information and hope that that will be enough to win a dispute. No, you have to emphasize that the specific item they are showing is incorrect. The account history section is massive, so be on the lookout for a duplicate and especially accounts that you don't remember opening. Make sure that no duplicates exist, but if they do, review the impact that they're having on your report and dispute them if necessary. If you notice any accounts that you don't remember opening, then contact the creditor immediately for more information. It could be a sign of identity theft. There's a lot more to say about this section and a ton of dispute strategies that go along with it, but for now, you've got a solid foundation to start with. Section 6 inquiries every time you apply for credit and some company is pooling your credit, that is called an inquiry. The Inquiry section is a record of every time your credit report has been requested and accessed. It includes details like the creditor's name, the type of business, the date of the inquiry, and which bureau it came from. Here you want to look for unauthorized inquiries that you don't recognize, soft inquiries that are incorrectly reported as hard inquiries or duplicate inquiries. These all represent incorrect information and they can be disputed. Section 7 collections the collection Account section lists any debts that have gone unpaid and have been sent to collections. In this section, you'll find the name of the creditor who's collecting the debt and the amount of the debt, the date the debt was first reported to collections, the date the debt was last updated, the status of the debt, whether it's open, closed or settled, and any remarks related to the collection. Similar to the account History section, each line of these collections needs to be verified as accurate. If there's a discrepancy at any point, you should investigate it further. Section 8 public records due to recent changes in the laws, this is good news. The only public records that are now allowed to appear on a credit report are bankruptcy documents. If you notice any public records besides bankruptcy documents like tax liens, contact the bureaus immediately and dispute that. When it comes to the bankruptcies themselves, review the details for discrepancies, but also pay attention to the filing dates. If There's a Chapter 13 bankruptcy that's over seven years from the filing date, or a Chapter 7 bankruptcy that's over 10 years from the filing date, they should have fallen off the report by now and you can dispute that and get it removed. Section 9 creditor contacts the creditor contacts or the furnisher contacts section is also pretty straightforward, and it lists the contact information of any creditor that provided information about you to the bureaus. There's not much to dispute in this section, but if you see a creditor that you don't remember doing business with, investigate the issue. Section 10 consumer statements not all credit reports have the consumer statements section. But for those that do, it contains any statements that you've given to the credit bureaus to clarify something about your credit. For example, if you dispute an item but it's not resolved or removed from your credit report, you might file a brief statement explaining why you disagree with this piece of information on your credit report. However, it's important to know that adding comments or statements can often backfire. Rather than helping, they can actually draw more attention to a negative item that you're trying to remove. So I recommend not having any consumer statements at all because they do not help you. And if you have any, ask the bureau to remove them. The better you get at reading and understanding credit reports, the less you'll have to worry about making comments about unresolved disputes. And if you have any credit report questions, drop them down in the comments. Now, if you noticed a few strange looking letters or numbers listed throughout your report, those are bureau codes and they're just used to categorize information. Experian, Equifax, and TransUnion. They each have unique bureau codes and I can do a deeper dive into those in a later episode. In the meantime, if you want to review the codes, I'm going to add the official guides over there in the show notes. And if you want six months of credit repair cloud software for free, plus access to our advanced disputing and business courses, go to creditrepaircloud.com freetraining and sign up for our masterclass. Here's my final point. Your credit report tells your financial story. Take control of it. Learn how to read it. Because the better you understand it, the healthier you'll be. You're not just learning how to improve your credit, you are developing a lifelong skill, one that you can use to build a business and change a lot of lives. And I'll end by saying, if you want to win more credit disputes, check out my episode on the five Mistakes to Avoid. And if you'd like to get certified in disputing and gain confidence and grow your very own credit repair business, check out our Credit Hero Challenge. Doors are closing soon, so sign up right now@creditherochallenge.com and keep changing lives.