5 Surprising Things You Could Find on Your Credit Report

Credit Report

Credit reports don’t always make perfect sense — in fact, they often surprise many consumers with the data they include or exclude. Here are a few examples.

Related: How to Read Your Credit Reports

1. Revolving Credit That Isn’t Revolving

Some loans feel like installment loans — the amount is finite and the payments are equal installments for a predefined period of time — but they are reported to the credit bureaus as revolving credit. For example, most motorcycle and scooter loans, as well as in-store financing for furniture and electronics, fall into this category.

Unlike an installment loan (such as an auto loan), these appear on the consumer’s credit report as unsecured credit. The effect is three-fold. First, a healthy credit mix is required for a great score, so it might be to the consumer’s advantage to obtain an installment loan instead of more revolving credit. Second, credit utilization will appear artificially high during the early stages of payoff. The account will look maxed out. Third, low-tier debt, like furniture loans, is scored less favorably than revolving debt, which is scored less favorably than home loans and auto loans.

Related: The Biggest Credit Score Myth That Just Won’t Die

2. Charged-Off Accounts

If an account balance is negotiated down, it could be reported as charged-off rather than paid-in-full. Negotiating balances is a smart strategy for any consumer overwhelmed by unpaid debt, and creditors will often accept a payoff amount that is lower than the total owed.

Be mindful, though, of the details: Ask the creditor if the account will be reported as paid-in-full. An account reported as charged-off will hurt the consumer’s score and hang around on the credit report for seven years after the account first became delinquent. By contrast, an account closed in good standing will improve the score and hang around for up to ten years from the date of last activity.

3. Hard Inquiries From Unlikely Sources

Some consumers apply for credit without realizing it. Renting a car with a debit card might be possible, for instance, but many rental car agencies first perform a credit check in order to authorize the rental. Other companies that are likely to run a credit check are cable TV providers, cell phone providers, utility companies and anyone else offering a service prior to receiving your payment. To avoid the hard inquiry, use a credit card when renting a car and pay a cash deposit to utility providers in lieu of a credit check.

The credit reporting agencies make mistakes all the time. In fact, about one-fifth of Americans have credit report errors, and tens of millions have errors serious enough to drag their scores down. This is why a regular and thorough review of each major credit report is an essential task for all consumers each year. (Visit annualcreditreport.com and get a free copy from each of the three major credit reporting agencies every 12 months.)

Investigate any weird, odd, unexpected or unfamiliar data immediately by following the instructions provided by the agency. If you have trouble getting mistakes removed, file a complaint with the Consumer Finance Protection Bureau. CreditRepair.com can help you through this confusing and complicated process; its credit repair services have helped thousands get credit back in good standing.

4. Forgotten Unpaid Accounts

Unpaid credit cards and auto loans aren’t in the weird category when it comes to credit reporting, but many people are surprised to find all sorts of other, often obscure unpaid bills on their credit reports. Unpaid library fines, parking tickets, memberships and any other legal debt can find its way to a collection agency and ultimately to the credit reporting agencies.

Creditors have gotten smarter in the new millennium and seek payment more aggressively than ever before. The mere threat of a negative report to a consumer’s credit file is often all the motivation a person needs to pay up.

5. Disputed Accounts

Once you initiate a dispute, both FICO and VantageScore will ignore that account when calculating your score until the dispute is resolved. The problem is that the omission could bring your score down significantly. If it’s a credit card, for example, the credit utilization ratio could shoot up without the benefit of the available credit on that account.

Or the average account age could come way down if there are few accounts to average and the remaining accounts are newer. This is probably why mortgage brokers advise home loan applicants not to initiate any disputes or otherwise rock the credit boat during the mortgage process.

  • Stephanie Barbaran

    So, at what point (such as what score) should a person diversify his or her credit with an installment loan instead of more revolving credit? What’s the tipping point that makes that a good decision instead of a bad decision?

    • Kimberly Rotter

      It’s a good question but I don’t know of any specific answer. Credit scoring agencies are cryptic. There is no magic number or hard and fast rule that applies to everyone. Standard advice is that if you want a great score, you have to keep a mix of credit products on your report.They do not all have to have current balances, but only open accounts will continue to age. Paid off loans and closed accounts eventually fall off the report.
      As for what makes an installment loan a good or bad decision, that really depends on the consumer’s financial situation. Car loans, mortgage, student loan, home improvement project loan, dental/medical loan, etc., can all be good or bad under various circumstances.

      • Stephanie Barbaran

        Thanks

  • So many consumers don’t realize they can negotiate their debts. And even if they do know, they don’t realize they can also influence how it’s reported by the creditor. This is really helpful information!

  • Carlos

    Library fines! It happened to me, but I assume that only certain municipalities movie library fines into collections. I racked up nearly as many in (never paid) library fines in an unnamed East Coast city and never had an issue. Three months after not paying a $70 library fine in Los Angeles (shoulda never rented Mama Mia -__-) I received notice that I know owed a collector the money.

    (It’s OK, fell off my credit report after 7 years.)

    • Kimberly Rotter

      I think this will be more and more the norm as technology makes it easier for institutions to identify and track down consumers. They have nothing to lose. The institution can sell the debt to a collection agency in order to recover at least a portion of the debt, and then just let the agency handle the dirty work. They all make money where previously it was a futile effort. Distasteful, but legal.
      If I ever get a chance to see Mama Mia I will try to get your $70 worth of enjoyment out of it. 😉