How To Read and Understand your Credit Report

Step 1 - Get your credit reports

Head over to Annual Credit Report and print your three credit reports. Make sure to do this from a computer. Do not purchase any scores or other credit products during this process. Your reports are freely available, weekly until the end of 2022.

Step 2 - Get your crayons, and let's color.

Once you have your three reports printed, use the color key below and start coloring! Use highlighters, markers, or crayons to notate the right color on each account you have reporting.


Accounts that are open, reporting to all 3 credit bureaus, has reported activity within the last 6 months, and a balance below 10% on credit cards. No late payments in the last 24 months.


Open credit cards with a balance more than 10% of the limit.

Stop! Pay down below 10% immediately if you can.

Credit card companies typically report once a month. Call and ask them what day of the month they report or look on your credit reports specifically for Date Last Reported or Updated, and then put a reminder in your calendar to pay it two days before that date, or call and request them to increase your limit so without having to pay it down, the balance to limit ratio is lowered.


Open credit cards with no activity reported in 6 months or more.

You have slowed down use on this card, and it may not even be counted in a credit scoring model. Don't forget to use these accounts. Put a reminder in your calendar to rotate usage of these to keep them in the mix of items that move your credit score. Non-use could cause the company to drop the limit or close the card.


Student loans with a balance owed (current or in collections)
Determine if the accounts appear to be reporting accurately.
Are they in default?

No action necessary if these are being paid on time each month.


Accounts with late payments within the last 24 months.
Charge-off accounts with balances reporting
Collections with or without balances updating or reporting in the last 24 months.
Accounts that are not yours.


Any accounts showing currently in dispute.

Disputed accounts are not included in SOME credit scoring models. Follow up on disputes (they will stay on your report until you specifically ask for removal.) Request method of debt verification from the credit bureau after they have completed the dispute, or ask them to remove it.


Closed accounts, derogatory accounts showing Date Late Reported of 6 months or older, unless account is charged off or delinquent.

Step 3 - What's next?

First, make sure you have at least two open revolving accounts colored green.

After that, you can start tackling the red accounts, paying down any high balances on other revolving accounts.

For yellow accounts, build a schedule to make sure you use these at least once every few months by charging and paying them off immediately.

For purple accounts, call and ask for "good-will" or "courtesy" removals of late payments within the last 24 months. Call the collection company representing any accounts colored purple and ask to settle the collection and request deletion from your credit report.

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