Learn How to Read a Credit Report: Understanding Trade Lines and Reporting Requirements

Credit reports are divided into numerous sections and list all consumer debts reported by creditors for the last 7-10 years. An individual who is able to read and understand his or her credit file is better prepared to catch mistakes that could damage a credit score. Legal guidelines exist to regulate the information contained within each credit report.

Sections of a Credit Report

Each credit bureau report is divided into five categories. Each credit bureau may refer to the categories differently, but the information requirements remain the same. The categories listed on all consumer reports are:

  • Personal information
  • Positive (Current) Accounts
  • Negative Accounts
  • Public Records
  • Credit Inquiries

Double-Check the Personal Information Section

The Personal Information section of a credit report contains the consumer’s vital information that helps to identify him or her and track accounts. The personal information section should contain:

  • Full name
  • Social Security Number or Social Insurance Number
  • Past addresses
  • Aliases (usually refers to a married woman’s maiden name)

If the personal information section contains the wrong SSN or SIN, or multiples of this number, that indicates that erroneous credit information may have been inserted into the report in the past. Personal information on consumers is provided by the creditors who make regular reports onto the consumer’s credit file.

Positive Accounts Information

The positive accounts section will list all credit accounts that are not considered to be in default. This includes all credit cards and loans the consumer currently holds and is making regular payments on. Positive trade lines should include:

  • Date the account was opened
  • Account balance
  • Name of creditor
  • Full contact information for creditor

Just because an trade line appears under positive accounts, that does not mean the account has a positive effect on a consumer’s credit score. It simply indicates that the debt is not currently in default.

Understanding Negative Trade Lines

Negative trade lines will appear under “Negative/Potentially Negative Accounts” in a credit file. These trade lines reflect debts that were never paid and fell into default. An unpaid debt can have a negative trade line reflected by the original creditor and also negative trade lines from any collection agencies who subsequently purchased the debt. These accounts are required to include the same information as positive accounts, but must also include:

  • Date of Last Activity (DOLA)–The date the account was first considered delinquent.
  • Date of Removal–The date the negative mark is scheduled to be removed from a credit report. This can be no longer than 7 years past the DOLA on debts in this category.

Once the 7 year reporting period on the debt expires, all trade lines that refer to the debt must be removed–regardless of when the trade lines were inserted. If the debt has been paid or settled, this must be noted on the trade line in question. Any previous consumer disputes must also be noted. These laws are evidenced in the Fair Credit Reporting Act.

The Public Records Section of a Credit Report

Not every consumer will have a public records section reflecting on his or her report. The reason for this, is that public records does not reflect all public records on the individual, such as marriage. It only reflects financially related records. Common public records contained in this section are:

  • Bankruptcy
  • Civil Judgment
  • Eviction
  • Tax Liens (paid or unpaid)

Each public record should reflect its payment status and the date which the public record was entered. Most public records have a negative effect on credit score yet, with the exception of unpaid tax liens, are all subject to a reporting period after which they must be removed.

Credit Inquiries Will Also Appear Within a Credit History

Every time a consumer’s credit report is pulled for review, a credit inquiry appears within his or her credit history. The last section on each report lists these inquiries, the dates they were made, and who made them.

Only credit inquires approved by the individual will affect his or her credit rating. Inquiries made for marketing purposes do not require consumer approval and have no effect on credit scores.

Credit inquiries are not subject to federal reporting laws and will appear within a consumer’s credit history for no longer than two years.