How To Review Your Credit Reports

Taking the time to review important dates on your credit reports while learning about your credit reports can be an asset to your future. Noticing the dates on your credit reports/accounts can help you understand your scores better. A free credit report can be obtained once a year from the three major credit bureaus—Experian, Equifax and TransUnion. Please understand, this is a credit history report, you will not be provided with credit scores – those you must purchase. To get a copy of the scores closest to what mortgage bankers use (without hurting your credit) It is best to purchase your credit reports and scores from MyFICO.

When looking at the three credit bureau reports note the following dates:

The date you opened your account: Most people do not know that the length of their credit impacts their credit scores. Some of the factors that are considered in this calculation include, the age of your newest and oldest accounts, the average age of all of your accounts, the length of time that different types of credit accounts have been established and the length of time it’s been since those different types of credit accounts have been used.

If you have recently opened up a new credit account, this could be hurting your credit scores.  If you plan on receiving financing in the near future, opening new credit will not only reduce your scores, but it will also end up costing you higher pricing on the loan.  This cost could wind up being hundreds and thousands of dollars over the life of your loan.  Timing is very important when opening new credit, thus it is imperative to analyze your short term and long term goals before filling out an application.

The date your account was closed: Paying off a loan or canceling a credit card will close your account. Because variety of credit has an impact on credit scores, if you lose a variety of credit category, this can drop scores.   An example would be paying off a car loan when it is the only installment credit on your credit profile.  When you close credit, what will still help your scores is the date it was opened.  As long as the account is on your credit (even if it is closed), the scores will still factor the open date into your average age of credit. However, once it drops off, it will take the date it was opened with it.  Closed accounts generally stay on credit anywhere between two and ten years.

The date your last revolving credit account balance was reported: Credit utilization impacts scores dramatically.  Credit card utilization refers to the ratio between your revolving debt balance and your revolving credit limits. Keeping your credit utilization below 10% is imperative to having a healthy credit report with little debt.   If you see a balance on your credit card that you paid off a few weeks ago, it means that the date your last revolving account balance was reported is prior to the date that you paid it.

The date of your credit file request: Whenever you apply for a new line of credit, there will be a hard credit inquiry, which can negatively impact your credit score. While these inquiries can stay on your credit report for up to two years, they will only affect your credit score for up to a year! Thus, the less hard inquiries you have on your credit report, the better.

Feel free to reach out to us if you have any credit questions or reports you would like reviewed!