Those cryptic credit reports

Home Office Computing, Feb, 1998 by Carol Leonetti Dannhauser

Remember that month five years ago when you didn't pay your Visa bill? Your credit bureau does. And even if it was just an absent-minded lapse, potential lenders who see it on your credit report might wonder if they can trust you. That's why the next time you check out the credit-worthiness of one of your new customers or suppliers, you should examine your own as well.

"People should pull their credit reports every year," insists Tina Powis-Dow, director of marketing and education at the Consumer Credit Counseling Service (CCCS) in Oakland, California. By doing so, you'll be better prepared to answer any tough questions that might arise when you apply for an office-renovation loan, request a higher credit limit at the computer store, or take out a lease on a new car.

To help you crack the code of your credit standing, we enlisted Powis-Dow and Deborah Heimbuch, formerly reflect each month your account of the CCCS in Omaha, Nebraska. Here are some examples of the lingo you might find on your credit report, getting any and what each means for you.

ACCOUNT: US Bkpt Ct, Baltimore, MD Docket #08511002 Voluntary bankruptcy Chapter 13 discharged on 05/23/92; petition on 06/01/90

RECORDED ASSETS: $100,000

LIABILITIES: $8,000

Chapter 13 is considered, in lawyer's parlance, "derogatory" information, so it will remain on your credit report for seven years from the time it's filed. But don't worry. Many creditors won't close the book on a Chapter 13 business, especially one that paid off its debts. "Some lenders might say, 'The owner had problems and I don't want to risk it,"' says Heimbuch. "But others may reason, 'The problem was cleared up in 1992. I'm willing to give this entrepreneur a chance."'

ACCOUNT: Chemical Bank, Jericho, NY Banking Acct #456920095206XXXX This credit card account was opened 05/04/79 and has revolving repayment terms

CREDIT LIMIT: $3,500

HIGH BALANCE: $2,512 As of 12/15/95, this open account is 120 days 2 times past due

BALANCE: $1,695 on 12/15/95; scheduled monthly payment is $73

MONTHS REVIEWED: 99

PAYMENT HISTORY. 44332211CCCCCCCCCCCCCCC999999999999 9999999996665443221111CCCCCCCCCCCCCCCCCCCCCCCCC

NUMBER OF TIMES LATE: 30 days=6, 60 days=4, 90 days=11, Derog=21

On this report, the Cs reflect each month your account was current. The numbers represent missed payments. Sorry, but with this report, you won't be getting any money soon. You can go back and pay this account off, but it's not going to wipe out your delinquency," says Heimbuch. And because this is derogatory information, it will follow you for seven years.

ACCOUNT: Chase NA, Hicksville, NY Banking Acct #42660006004XXXX This credit card account was opened 03/20/85 and has revolving repayment terms

CREDIT LIMIT: $12,500

HIGH BALANCE: $12,684 As of 08/01/96, this open account is current and payments are being paid on time but was delinquent 30 days; scheduled monthly payment: $247; last payment reported: 01/06/97

BALANCE: $12,300 on 02/10/97

MONTHS REVIEWED: 99

PAYMENT HISTORY: CCCCCCCICCCCCCCCCCCCCCCCCCCCCCCCC

TIMES LATE: 30=1, 60=0, 90=0

See that I in a sea of Cs? So will a lender. This means you were late once and the money man is going to want to know why. Luckily you strayed just once, and only for 30 days. But you better have a good excuse. "Creditors have heard everything, so just tell the truth," says Heimbuch.

ACCOUNT: Hopkins County Court, Madisonville, KY Docket #a0053552; BK PG Seq # 13865203 Small-claims judgment satisfied on 02/23/93; original filing date 06/28/92

AMOUNT: $4,100

PLAINTIFF: Wilson & McPherson

Another iffy situation: Some creditors make a big deal out of small-claims judgments, others don't. Unfortunately, it's impossible to predict who will, so be prepared to defend yourself Perhaps you didn't like the way Wilson & McPherson installed carpeting in your new home office and you refused to pay. Clearly you settled the argument in 1993, but potential lenders might worry that you have a habit of disputing bills. To be safe, attach a short statement to your credit report explaining why you filed a claim. From then on, everyone who requests a copy of your credit report will also receive that note.

ACCOUNT: Lee Co. Civil Court, Fort Myers, Certificate #211412123 County tax lien on 12/08/91

AMOUNT: $2,000

Watch out. "You didn't pay your property taxes, and creditors don't like that," says Powis-Dow. Pay up, and your relationship with potential lenders will become less taxing. This note will remain on your report for seven years, but if you pay the taxes promptly and you can explain why you missed the payment deadline, you shouldn't have anything to worry about.

ACCOUNT: Wells Fargo Bank, Concord, CA Banking Acct #200543445667XXXX This credit card account was opened 02/05/91 and has revolving repayment terms

CREDIT LIMIT: $5,000 As of 02/22/94, this closed account was current and all payments were made on time

BALANCE: $0 on 04/30/94

MONTHS REVIEWED: 59 *** Account closed-consumer's request-reported by subscriber

You'll get lots of kudos for this move. You always paid on time, and when you didn't need the card anymore, you closed the account. You should do the same for any credit card you're not using, if you don't foresee the need for a capital infusion in the near future. If you just let the account sit there, a creditor will wonder if you're planning to run it up once your other cards are maxed out.