Interpreting your credit report can be tricky if you’re not familiar with the terminology or presentation of financial documents. The first thing you want to do upon receiving your credit report is to review the identifying information. This is all your personal info including your name, address, previous addresses, employers, Social Security number, etc., all of which appear on the top or bottom of your credit report.

You should always take time to review this information and make sure that is up to date and accurate. If there is any information that is incorrect, you need to inform the credit bureau of the mistake and have a new credit report issued as soon as possible. (NOTE: under the Fair and Accurate Credit Transactions Act of 2003 (FACTA), you can request that your credit report only display a portion of a your Social Security number, thereby lowering the chance for identity theft.)

Your account information is the major section of your credit report. Here is where you find the names, account numbers, high balance, outstanding balance, loan terms, payment history and current status of every credit account or financial loan that you have established over time. The presentation of this information varies depending on where your credit report was issued from; some credit bureaus use give detailed explanations to walk you through your account information-other credit bureaus still use a system of symbols or letters to detail that information. If you are having trouble interpreting your account information, check the envelope you received your credit report in: many bureaus now include a “How to read” sheet with each mailing.

Credit bureaus also collect public record information from courthouse records and registries. This means that criminal proceedings, judgments, tax liens, debt collections and bankruptcies all appear on your credit report. Be aware.

Finally, if anyone has requested a copy of your credit report in the last two years, it will appear at the end of your credit report as an inquiry. It is important that you always review all inquiries in detail: they let you know who has been looking into your credit history and, more importantly, if any unauthorized persons have obtained your credit report. If you suspect you may have become the victim of identity theft, this is the first place you should be checking. Most times however, an inquiry will have been made by a credit card company that asked a credit bureau for a list of names of consumers who meet certain credit criteria. No worries though: the credit card companies are never given your full credit report, but rather your name and contact information so that they can pre-approve you for their credit cards. (NOTE: Under the Fair Credit Reporting Act (FCRA) and FACTA, you have the right to block your credit report from unwanted solicitors for a period of five years.)

So, now that you know how to interpret your credit report, what does your credit score actually mean?

A credit score typically runs between 300 and 800, 800 being a person with a very strong credit history, 300 being a person with a disastrous credit history. Of course, most credit-card companies or financial lenders factor in other information besides you overall credit score when determining what kind of credit risk you are. Past instances of account delinquency or defaulting on loans, as well as your repayment history, all factor in largely with how lenders and creditors view you as a risk.

Bottom line: Your credit score, while not everything, does give you a good idea of where you stand, and what kinds of options are available to you establishing a viable line of credit. If you find you are unhappy with a low credit score, take a look at the reasons that most bureaus include to explain how they came to tally your score. The most common reasons for a low score usually involve the following:

  • Serious delinquency.
  • Serious delinquency and public record or collection filed.
  • Derogatory public record or collection filed.
  • Time since delinquency is too recent or unknown.
  • Level of delinquency on accounts.
  • Number of accounts with delinquency.
  • Amount owed on accounts.
  • Proportion of balances to credit limits on revolving accounts is too high.
  • Length of time accounts with outstanding balances have been established.
  • Too many accounts with balances.

If you want to raise your credit score, try to make sure you have no long outstanding balances, that you are consistently paying off what balances you owe, and that you are avoiding any potential situations where you would be listed as a delinquent account, or have to deal with a collection agency. Having a good credit score, and promising credit history, will greatly increase your chances of getting that loan or line of credit you’re hoping to establish.

Sabrina Wolfe is a contributing writer for http://www.financialadvicecentral.com She specializes on articles in the areas of personal finance and credit