HOW TO READ YOUR CREDIT RATINGS
Many people are clueless when it comes to actually reading their credit reports. It may feel like looking at a bunch of nonsense on a piece of paper, but don’t worry, there are some simple ways to decipher important information on your report. It is essential to understand that the marks on your credit score and your credit ratings are divided into three main categories: positive, neutral, and negative. These categories are used to simply help you distinguish what is harming, helping, or not affecting your credit score. Everybody should be able to read their credit report and understand what the ratings and terms mean.
Positive Ratings:
Paid satisfactory/paid as a agreed (you have followed your payment agreement and paid on-time)
Current account with no late payments
Account/credit line closed (when the consumer closes a line of credit not a creditor) PS- YOU are the consumer!
Neutral Ratings:
Current was 30 days late
Settled
Inquiry
Credit card lost
Refinanced
Paid was 30 days late
Negative Ratings:
Tax liens
Judgements
Paid (Was at some point LATE)
Bankruptcy (filed, dismissed, or discharged)
SCNL
Paid collection
Repossession/Surrender (repossession of an object because of failed payment)
Bank liq reo
Chargeoff (Creditor wrote off bad credit)
Delinquent
Current (was 60, 90, or 120 days late)
Collection account (when a collection agency is assigned to get your money)
Paid chargeoff (you wrote off bad credit)
Accounts closed (grantor's request, when a creditor takes away your credit privileges)
We know that this seems overwhelming and like there are so many more negative credit ratings than positive ones, but once you have them down they are nothing to fear. Understanding your credit score and credit ratings are important so you can begin to change your financial behavior after you know what will positively or negatively affect your credit.
Information pulled from:
Notley, S. (2002). Credit solutions: Proven strategies to establish and re-establish your credit. The Manning Group
If you ever have questions, contact us - your expert consultants.
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Solutions Team
