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May 01, 2009 | Mike | Comments 0
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Do you have any clue what your credit score is?

….do you?  Previously, I spoke about the FICO score, what it is, how is it calculated, blah, blah blah.  Recently, my wife and I sold our townhome and purchased a new construction single family home, both in the Raleigh-Durham region of North Carolina.  When you purchase a new home, there are three key ingredients that your potential lender is going to look at (among many others).  1) Credit Report and Credit Score, 2) Do you have enough monthly income to support the mortgage payment, and 3) How much liquid cash do you have for a down payment?  #’s 2 & 3 are pretty simple.  2 – make money.  3 – save money.  #1 is much more complicated, and why are there so many credit report bureaus out there anyways (with different scoring mechanisms).  I’m sure they serve a purpose, i.e. more than one set of eyes, but it just makes things more complicated for the average individual.

So, what’s my point?  Check your credit often…but not too often.  I would recommend getting a credit report once every quarter and your credit score once per year (Yes, they are separate and distinct, and no, I have no idea why).  The credit report will show items such as:

1. Personal Information

Check to see that your name, current address, and date of birth are correct.

2. Report Number
Refer to this number when making inquiries.
3. Report Summary
Sums up current credit accounts and balances, and notes delinquent or overdue amounts.
4. Account Type
Shows the type of account (Credit Line, Installment, Mortgage, Open, Revolving).
5. Number of Accounts
Shows the total number of accounts reported for each type of account.
6. Reported Balance
Shows the total balance of all types of accounts.
7. Payment
Shows the sum of payments for each account type.
8. Current
Shows the total number of current accounts.
9. Closed
Shows the total number of accounts reported closed.
10. Credit Bureau
Indicates which of the three main credit reporting agencies (Equifax, Experian, TransUnion) reported the information.
11. Inquiries
Shows the total number of inquiries about your credit that were reported. (Inquiries may be made by banks, department stores, employers, and landlords).
12. Derogatory Items
Shows the delinquent/derogatory information that has been reported by the credit reporting agencies.
13. Public Records
Shows the number of matters of public record (court records of bankruptcies, tax liens, judgements or foreclosures, etc.) reported by the credit reporting agency.
14. Collection Accounts
Shows the number of accounts turned over to a collection agent, as reported by the credit reporting agency.
15. Delinquencies
Shows the number of accounts that are currently delinquent or derogatory, or were previously delinquent
or derogatory.
16. Account Information
The creditor with whom you have or had an account with, the account number, and type of account.
17. Tradeline Type
Explains who is responsible for the account and the type of participation you have with the account.
A – Individual Account Z – Authorized User C – Co-Maker U – Undesignated
J – Joint Account S – Spouse’s Account M – Maker T – Terminated
18. Date Open
When the account was opened.
19. High Limit
Your credit limit, or the most you have ever charged on the account.
20. Monthly Payment
Your monthly payment for this account.
21. Account Balance
The balance you owe, as of the date the information was obtained.
22. Last Reported
The last date the account was updated by the creditor.
23. Account Status
Indicates whether the account is current or past due.
24. Amount Past Due
Shows the total past due amount for all accounts.
25. Credit Bureau
Indicates which of the three main credit reporting agencies (Equifax, Experian, TransUnion)
reported the information.
26. Days Past Due 30/60/90
Any balance that is past due will appear in the Past Due 30/60/90 amount columns. Past Due 30/60/90 indicates the number of times an account was overdue 30, 60 or 90 days within the past seven years.
27. History Date
Date at which current history begins.
28. 24 Month History
For chronological reference. Indicates whether the account was current or past due on a month-to-month basis over the last 24 months &151; including the date shown under “History Date.”

This is especially important if you are looking to purchase a house or other big-ticket item.  Preparing for this ahead of time will help immensely in the long run.  Knowing what the lender is going to analyze you on before-hand will help especially if your credit score is a) not good, or b) has incorrect information included.  If you know this ahead of time you can get it fixed before the crazy bankers get a hold of all of your life’s information.

Here is a cool quiz from Kiplinger on “Do You Know the Score on Your Credit”

Credit scores may seem like a riddle wrapped in a mystery inside an enigma. Few people understand what goes into the number, yet it is closely tied to their finances. In fact, a bad score can cost you hundreds or even thousands of dollars.

It certainly pays to know your score — and how to boost it. Take our QUIZ to unwrap the mystery:

By Erin Burt and Kim Lankford

Entry Information

Filed Under: Credit & Debt

About the Author: Mike is the founder of this site, www.mikefanelli.com He has extensive professional experience in accounting and financial analysis, and is currently a licensed CPA in the state of North Carolina.

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