Whether you are in Canada or the United States, when the Credit Reporting Agencies send your credit report, they will furnish you with information on how to read it, since each is slightly different.

You will want to read through the entire report (and its instructions) very carefully. It will contain four basic types of information: personal information, account records, credit inquiries, and public record information. I suggest using a highlighter as you read through your report, highlighting any information that you think needs to be corrected.

Following these guidelines below will help you as you read through your credit report:

PERSONAL INFORMATION

Verify all the “personal information”, such as your name, your date of birth, your address, your social security number (social insurance number in Canada), your employer’s name, your spouse’s name, etc. If the information is not correct, you’ll need to have it updated. Creditors want to see that you are stable; therefore, the longer you have worked in the same place and the longer you have lived at your present address the better. Also, if they have the wrong personal information, this CAN cause you problems later. (If you have been the victim of identity theft, your personal information may be incorrect! If it is incorrect, pay close attention to the next step!)

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ACCOUNT RECORDS and PUBLIC RECORD INFORMATION

Verify the “account records” and “public information” records. Do all of the accounts belong to you? If you have a name like John Smith, don’t be surprised to find Creditors of some OTHER John Smith showing up on your report. If you find items that do not belong to you, try contacting the Creditor directly. If the Creditor doesn’t remove the item, contact the Credit Reporting Agencies and explain that the account is not yours.

In cases of identity theft, where the person has used your information to obtain credit, there may be accounts listed that you know nothing about. In the US, if you believe you are the victim of identity theft, visit the FTC’s “National Resource on Identity Theft”.  In Canada, go to the Privacy Commissioner’s Fact Sheet on Identity Theft.

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Verify that the balances and the credit limits showing on each account are accurate and that any accounts you have previously closed are actually showing as closed. Potential creditors will look at the percentage of your outstanding account balances against your available credit limits and at the percentage of your available credit limits against your income. In both cases, lower percentages will look best. Your available credit limits should not exceed 25% of your income.

For example: You make $30,000 per year, your total available credit limits are $25,000, and your outstanding account balances are only $1,000. While the percentage of your account balances is low compared to your available credit limits, if you actually used all of your available credit, you would be unable to pay all of your bills; therefore, a potential Creditor may hesitate to lend you money.

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Verify the “Date of Last Activity” showing for each account. (The “Date of Last Activity” is usually defined as being a date 30 days after the last payment missed was due.) Outdated items are usually the easiest to get removed.

At times, Creditors may use questionable procedures, which keep a negative item on a credit report. They may change the “Date of Last Activity” or write off the bad debt and then sell it to a collection agency, which then reports the account to the Credit Reporting Agency and extends the time an account is reported. By disputing items you believe to be outdated, you may be able to get these items removed.  See Length of Reporting (For US Residents) or Length of Reporting (For Canadian Residents).

Negative items that are outdated, inaccurate, unable to be verified, or that don’t belong to you MUST BE REMOVED.

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NEGATIVE ITEMS

Look for negative items, such as late payments, collection accounts, charge-offs, bankruptcies, foreclosures, judgments, and delinquent child support. Obviously, these items count against you with a potential Creditor.

Late payments: Check the payment history for each account and verify that this information is correct. If the information is not correct, prove that you were never late by providing canceled checks or payment receipts. The fewer late payments you have, the better your credit rating will be, of course. If the information is correct, but is now outdated, ask the Credit Reporting Agency to remove the late payment information.

Collection accounts: If a Creditor has turned your account over to a Collection Agency, the account should only be listed under the Collection Agency on your report. If the account is listed with both the original Creditor and the Collection Agency, have this corrected. Also, the Collection Agency listing will not always show the original Creditor. Contact the agency to determine the original Creditor. If the collection account is outdated, have this item removed.

Bankruptcies: In the US, if you’ve had a bankruptcy dismissed or discharged over 10 years ago (6 to 7 years ago in Canada), it should not appear on your credit report. If your bankruptcy is more recent, verify that the filing date and the dates of dismissal or discharge are correct.

Judgments: Verify that the judgment actually belongs to you. If you were unaware of it, contact the Courthouse. If the judgment does belong to you and it’s now outdated, have the item removed.

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CREDIT INQUIRIES

There are two types of “credit inquiries”: (1) where you have applied for credit (hard inquiries) and (2) where businesses with a “permissable purpose” have requested your report.  Credit scores are not affected by inquiries not initiated by you (promotional credit offers), inquiries by your employer, or your own requests to view your credit report.

In the US, inquiries initiated by you will remain on your credit report for 2 years.  In Canada, the general rule seems to be that inquiries are purged automatically 3 years from the date of the inquiry, though a minimum of 5 inquiries are kept.

So how do these inquiries affect you? 

If you have a history of declined applications (hard inquiries), it makes you look like a credit risk.

If you have a history of multiple approved applications (hard inquiries), Creditors will look at your ability to repay these loans by comparing your outstanding lines of credit to your income.  The more debt you take on, the more your capacity to repay a loan is diminished.  Of course, if you’ve been shopping for an auto loan, you are apt to have multiple inquiries.  This will not adversely affect your credit score as long as the applications are all done within a few weeks of one another. 

Length of Reporting (For US Residents)

The guidelines for what is considered “outdated” are very clearly spelled out in the Fair Credt Reporting Act (FCRA), though it’s important to remember that each state has it’s own laws governing credit reporting.  When there are contradictions between the FCRA and state law, the law which offers the best consumer protection would take precedence.

In general, the length of reporting periods are:

Bankruptcies: 10 years from the discharge date of the bankruptcy

Civil Suits | Civil Judgements | Dates of Arrest: 7 years or until governing statute of limitations has expired

Collections or “Charged to Profit and Loss” Accounts: 7 years --*Exception: The reporting periods have been lengthened for certain adverse information pertaining to U.S. Government insured or guaranteed student loans, or pertaining to national direct student loans.

Other adverse information, other than convictions of crime: 7 years

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Exemptions to the above rules governing the length of reporting:

1. Credit transactions involving a principal amount of $150,000 or more
2. Underwriting of life insurance involving face amount of $150,000 or more
3. Employment of any individual at an annual salary of $75,000 or more

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Reporting Periods for Collections or “Charged to Profit and Loss” Accounts begins on the expiration of 180 days from the date of the delinquency immediately preceding the collection activity, charge to profit and loss, or similar action.

These rules only apply to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996.  (Prior to 1997 any account activity could extend the reporting period so creditors and collectors took advantage of this loophole to keep negative items on a consumer’s report for many years. --source, Carreon and Associates)

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OMG. PANIC ATTACK FORTHCOMING!!

You’ve obtained your credit report and read through it, noting what items can be disputed, etc, so you may be feeling discouraged or, as it was in my case, COMPLETELY PANICKED.  Stop for a second.  Take a deep breath.  DON’T GIVE UP HOPE YET! The next step will walk you through disputing the entries on your report.  It CAN be done.  Just remember to be patient.  We didn’t get ourselves into this mess in a day, so it will take time to straighten it all back out.  BUT.  It can be done.  And that’s the most important thing!

So continue on to Step Three: Disputing Entries on Your Credit Report and remember, you are not alone.  I’m with you every step of the way!

Length of Reporting (For Canadian Residents)

Canadians, your laws are a bit tricky, as you seem to have no federal guidelines, but leave it up to the individual provinces instead. The following chart comes from the Financial Consumer Agency of Canada and shows the reporting periods followed by TransUnion and Equifax by province.

Please make note of the fact that each Credit Reporting Agency seems to have somewhat different guidelines and defintions on reporting periods.

TransUnion	BC	AB	SK	MB	ON	QC	NB	NS	PEI	NL	Terr.
	(Years)
Credit transactions (trades) (from the date of last activity or the date opened)	6	6	6	6	6	6	6	6	6	6	6
Judgments (from the reporting date)	6	6	6	6	7	7	7	6	10	7	6
Collections (from the reporting date)	6	6	6	6	6	6	6	6	6	6	6
Secured loans (registered items) (from the date opened)	5	5	5	5	5	5	5	5	5	5	5
Bankruptcy (from the discharge or reporting date)	6	6	6	6	7	7	7	6	7	7	6
Registered consumer proposal, Orderly payment of debts (from the date satisfied or reported, whichever comes first)	3	3	3	3	3	3	3	3	3	3	3
Credit counseling (from the date satisfied or reported, whichever comes first)	2	2	2	2	2	2	2	2	2	2	2
	BC	AB	SK	MB	ON	QC	NB	NS	PEI	NL	Terr.

Equifax	BC	AB	SK	MB	ON	QC	NB	NS	PEI	NL	Terr.
	(Years)
Credit transactions (trades) (from the date of last activity)	6	6	6	6	6	6	6	6	6	6	6
Judgments (from the date satisfied or deposit)	6	6	6	6	6	6	6	6	7 to 10	6	6
Collection (from the date of last activity)	6	6	6	6	6	6	6	6	6	6	6
Secured loans (registered items) (from the filing date)	6	6	6	6	6	6	6	6	6	6	6
Bankruptcy (from the discharge date)	6	6	6	6	6	6	6	6	6	6	6
Registered consumer proposal, orderly payment of debts (from the date paid)	3	3	3	3	3	3	3	3	3	3	3
Credit counseling (from the date paid)	3	3	3	3	3	3	3	3	3	3	3
	BC	AB	SK	MB	ON	QC	NB	NS	PEI	NL	Terr.

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OMG. PANIC ATTACK FORTHCOMING!!

You've obtained your credit report and read through it, noting what items can be disputed, etc, so you may be feeling discouraged or, as it was in my case, COMPLETELY PANICKED. Stop for a second. Take a deep breath. DON'T GIVE UP HOPE YET! The next step will walk you through disputing the entries on your report. It CAN be done. Just remember to be patient. We didn't get ourselves into this mess in a day, so it will take time to straighten it all back out. BUT. It can be done. And that's the most important thing!

So continue on to Step Three: Disputing Entries on Your Credit Report and remember, you are not alone. I'm with you every step of the way!

Is it possible to have too many credit inquiries showing on your report and, if so, can you have them removed?

The inquiry section contains a list of businesses that have received your credit report within the past 24 months. This can look bad to a potential Creditor. They may believe that you’ve received these lines of credit and the accounts have just not appeared on your credit reports yet. If they believe that you have overextended yourself, you can find yourself being denied credit, due to the inquiries.

I’ve never had this occur (which doesn’t mean it can’t). Be careful when soliciting credit lines. If you’re interested in buying a new car, don’t let every dealership in town request your credit report. Shop around, settle on the car you’re interested in, and THEN let them run your credit. Treat your credit report as a very special, private thing that is NOT meant to be seen by everyone in the world! Practice safe-crediting! smile

Most potential Creditors disregard inquiries over 6 months old, since by that time, the account should have appeared on your report, if you really did receive the credit. 

In Understanding Your Credit Reports, you stated negative entries should only remain on your credit report for 7 years from “date of last activity” (or 10 years, in the case of a bankruptcy). What exactly is the meaning of “date of last activity”? Is there a legal definition for this? If an account goes from onecollection agency to another to another does all that time count as “date of last activity”?

Okay, I went to Experian to see what their definition was and this is what I found: “The original delinquency date is the date you first missed a payment - the original date the account became late - and after which you never again brought the account current.” This would be the “date of last activity”.

http://www.experian.com/ask_max/max120402a.html

Also, I found the following at another site, though I’m not sure of its validity: “Re-aging of debts is strictly illegal and is more than sufficient grounds for filing of a lawsuit. The DLA is defined by Congress as being a date 30 days after the last payment missed was due.”

What should a bankruptcy look like on a credit report? I have some entries, which show as “included in a bankruptcy”, and others, which were also included in the bankruptcy, that show notations for 30/60/90 days late and account balances.

Okay, I’ve never filed a bankruptcy (knock on wood), so I’ve never actually seen one listed on a credit report. I did a bit of hunting and found a site called “411 Bankruptcy”, which states: “After the discharge, you are entitled underfederal law to have the balance of each discharged debt reported as zero. The history of delinquencies can be reported, but the balance must be zero. If it is not so reported, dispute the debt.”

https://www.411bankruptcy.com/creditrepair.asp

Note: I know very little about bankruptcies, but I believe the key here may be the discharge of the bankruptcy.

I’ve researched one of the Creditors listed on my report and they don’t seem to exist. Is this good or bad?

Creditors must be able to verify the item in question. If the Creditor no longer exists, then there is no way for them to prove the negative information provided to the Credit Bureaus and the item will be removed. (Yay!)