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How to Translate Your Credit Report

March 30, 2012
Ask Erica
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QDear Erica,

I have my credit report and don’t understand what I’m looking at. There is a bunch of stuff on my credit file that I don’t recognize. There is a Bank of America account that I closed a long time ago. There is also a medical bill that I’m pretty sure I paid, and it’s showing up as being in collections. It’s for $36 . Can you tell me how bad that is and what I should do about it? Should I fight it or pay it? I’m pretty sure I did pay, but it’s been two years, and I don’t have any of the papers any more. My score is 598, so I’m assuming that all of this is messing me up bad. I need to clean up my credit. Thanks for your assistance. -- Petra

ADear Petra,

One of the problems with credit reports is that they are not the easiest documents to read. There is a reason for this, though. These reports really aren’t for us as individuals, but are developed for businesses that know how to identify and analyze the data contained in them. So unless you’ve seen many of these reports and know what to look for, they can seem chaotic and appear to have information on them that simply shouldn’t be there.Ask Erica

The Bank of America account is probably still being listed because it was in good standing when you canceled it. Positive information remains on a report indefinitely, and that’s what you want. Now, if it’s being reported as still open, maybe it was never properly closed. Contact the bank to find out.

Regarding that doctor’s bill that went into collections, I’m not sure if it should be listed or not. You don’t seem terribly confident that you definitely sent the money. It’s amazing how many of these little bills we can get from one doctor or hospital. One for such a small sum can easily slip through the cracks.

You have a choice here. If you really do believe that you paid, dispute it with the credit bureaus. If the collector can’t prove it to be correct, they have to stop reporting it. On the other hand, if they’re right, write a check for $36 and send it to the collection agency as soon as possible. You’re right — that tiny debt has been dragging your score down. Any account in collections is a black mark. Paying it off won’t make evidence of it disappear, but when it shows a zero balance due, your report will look better and your score will eventually rise.

Now review your credit report again. It should list only accurate and timely information. Sometimes there will be duplicate entries of the same account — that looks confusing, but it won’t have any effect on how a creditor sees you. Pay attention to the personal identification section, too — make sure your name is spelled right and that your Social Security number and address are correct. Again, if you spot inaccuracies, use the credit reporting bureau’s online dispute system.

After that, pull all three reports annually (you can do so for free at and keep an eye on what’s being logged. You’ll get used to reading them after a while. You may also want to be sure your credit scores are moving in the right direction, too, especially if you’re going to be in the market for a loan. Credit scores are a snapshot of your credit health. The credit bureaus, and businesses like FICO, calculate them using secret formulas and the information in your credit reports. And financial institutions use them to make quick decisions on your credibility. You can pull your FICO score for about $20 at




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