What the sections mean and what to ignore
Okay. Last time we talked about where to actually pull your report from for free, so by now you should have it — or you should have it downloading, or you're planning to do it tonight, no worries at all either way.
Today we're just going to open it up and figure out what you're even looking at. Because I remember the first time I pulled mine, it felt like a legal document written by someone who did not want me to understand it. Lots of headers, lots of small print, a bunch of stuff that looks important but isn't, really.
So let's walk through it section by section, and I'll tell you what to actually pay attention to and what you can basically skim.
Personal information — skim it, but check it
This is your name, addresses, employers, stuff like that. Most people's eyes glaze right past this section, which is fine, except — actually check it once. Old addresses are normal, everybody's got those. But if there's a name on there that isn't yours, or an employer you never worked for, that can be a sign something got mixed into your file that shouldn't be there. Takes ten seconds to check. Then move on.
Accounts (sometimes called "trade lines") — this is the whole ballgame
This is the section that matters. Every credit card, loan, and line of credit you've ever had is going to be listed here, with stuff like when you opened it, the balance, the limit, and your payment history going back... a while.
Here's what I'd actually look at for each one:
- Is the balance right? Not "close enough" — actually right, as of a recent date.
- Is the limit right? This matters for utilization, which we talked about a couple lessons back.
- Is the payment history accurate? This is the one people skip and it's the one that can actually hurt you if it's wrong. A late payment that never happened, sitting there for years, dragging on your score for something you didn't even do.
I'd go account by account and just ask "does this match what I know to be true." Takes a while. That's fine, that's the homework basically.
Inquiries — mostly ignore, with one exception
This is the list of who's checked your credit. Every time you apply for a card, a loan, a phone plan sometimes, it shows up here. People panic about this section way more than they need to.
I feel like inquiries get more worry than they deserve. A hard inquiry knocks a few points off, temporarily, and it fades. It's a small thing. The exception is if you see an inquiry from a company you've never dealt with — that's worth a phone call, because that can mean someone applied for something in your name.
Public records / collections — read it, don't panic yet
This is bankruptcies, collections accounts, that kind of thing. If there's nothing here, great, skip it. If there is something here, don't do anything with it today. We're going to spend a whole lesson later on disputing stuff that's wrong, so if you see something here that surprises you, just... note it. Write it down. Don't call anyone yet. We'll get there.
The stuff you can basically ignore
Every report has some filler — definitions of terms, a legal disclosures page, sometimes an ad for a credit monitoring product buried in there like it's part of the report. It isn't. Skip all of that. I'm not saying it out of laziness, I'm saying it because I've watched people spend forty minutes reading the "understanding your FICO score" glossary page when they could've spent that time actually checking their own account balances against reality.
Here's a story that's kind of the whole point of today's lesson, actually. I went up to Timp a while back with a buddy of mine, and the whole way down — and it's a long way down, your knees know it by the bottom — he's talking about this car loan that's stressing him out. Not the payment amount. Just this general dread about it. So we get to the parking lot and I said, well, have you actually read the loan agreement, like the whole thing? And he hadn't. He'd read the monthly payment number and that was it. So we sat in his car and read it together, right there, and it turned out the rate was totally fine. Reasonable, even. The dread wasn't coming from the actual terms. It was coming from not knowing the actual terms.
That's what I want for you with your credit report. Not "skim it and feel vaguely bad." Actually read the section that matters — your accounts — and let the other sections be what they are, which is mostly noise.
I feel like people get intimidated by a document because it's long, and assume all of it needs equal attention. It doesn't. Ninety percent of what you need is in that accounts section.
Before next time: go through your accounts section line by line — yeah, again, I know, we did this with statements too — and just flag anything, balance, limit, payment history, that doesn't match what you'd swear was true. Don't fix anything yet. Just flag it.