Most people have never looked at their credit reports, which are home to a tsunami of numbers and dates, only some of which are important.
Your credit reports from the three major credit bureaus — Experian, Equifax and TransUnion — are available for free once a year from Annual Credit Report. When reading these credit reports, pay attention to these five dates:
The date your account was opened
The length of your credit history makes up 15% of your FICO score. Several factors are considered in this calculation — including the ages of your oldest and newest accounts, the average age of all your accounts, how long different types of credit accounts have been established and how long it’s been since different types of accounts were used.
The dates your accounts were opened will impact many of these factors. The older your active accounts, the better. So if you’ve opened several new accounts recently, you may want to hold off on new credit applications for a while and let your length of credit history grow.
The date your account was closed
When you cancel a credit card or finish paying off a loan, your account will be closed. However, it will remain on your credit report. Closed accounts affect your score less and less as time goes on, but you’ll continue to see accounts on your report long after you’ve stopped using them, often up to 10 years.
The date your account balance was last reported
Credit utilization, or the amount of your credit limit in use at any given time, makes up 30% of your FICO score. The ideal utilization lies somewhere between 1% and 30%, which causes many people to believe that carrying some revolving debt is crucial for a good credit score. But since most balances are reported mid-billing cycle, you can have a healthy reported utilization and avoid paying interest at the same time.
Ideally, you should keep your utilization lower than 30% at all times. However, if you want to know exactly when your balance is being reported, check out the date on your credit report. Then, make sure your utilization is below 30% by that date.
The date a public record was filed
Most negative public records on your credit report — like accounts sold to collections, civil judgments and bankruptcies — fall off after seven years. As a general rule, your seven year period starts on the date the public record was filed. So if you have any public records, you can predict when these black marks will disappear by looking at the date filed.
The date your credit file was requested
When you apply for new credit, a hard credit inquiry dings your credit score. Hard inquiries remain on your credit report for two years; they affect your score only for six months to a year. The fewer hard inquiries, the better, so check the inquiry dates to see when these will fall off your report.
Bottom line: Pay attention to account open and close dates, report dates, filed dates and request dates. All of these can affect aspects of your credit score, and let you know how long certain past actions will impact your credit history.
|Erin El Issa is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @Erin_Lindsay17.|
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