How to Read a Credit Report

UPDATE: Cozy was acquired by Apartments.com in 2018, and the service no longer exists as described above. If you're looking for a simpler alternative that works similarly to Cozy, try MySmartMove from TransUnion: retipster.com/go/mysmartmove/yt-qbxh-7UE3dE (REtipster Affiliate Link).
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So you've got the credit report... now what?

I've looked at many personal credit reports in my time, and I know that most of them are very confusing and difficult to understand.

When I worked in the commercial banking world, I was wildly confused by the first several credit reports I read. It was like I needed a translator to go line-by-line, helping me understand what each word and number meant.

I was amazed at how one report could take a fairly simple set of information (the past decade of a person's debts and obligations) and make it appear so foreign, abstract, and onerous to read through.

Luckily, the credit reports generated through Cozy (which are generated through Experian) are literally the most easy-to-read summaries of a person's credit history I've ever seen.

That being said, I think the average person could still benefit from a little bit of hand-holding, so I put together this little video to walk you through one example.

It's worth noting that to this day, I've never seen a PERFECT credit report (with a score of 850), but remember - we're not looking for perfection. We're looking for reasonable assurance that the potential tenant or borrower has shown a historical pattern of honoring their financial commitments - and if they haven't, we'd better get a satisfactory explanation as to why they haven't (and why we can expect them to honor their financial commitments going forward).

Ultimately, the decision as to whether or not you should rent or lend to an applicant is up to you - but in either case, it can be extremely helpful and informative to be armed with this kind of data. It really helps paint a picture of who you're dealing with.