An Introduction to the Credit Report


One thing that has certainly gotten plenty of discussion in recent years has been credit reports. Over the years, the credit report has become an increasingly important facet of American life. However, you may still be wondering exactly what a credit report is. To help, here is a brief introduction to credit reports.

Simply put, a credit report is a document that is requested by certain entities that includes information about a person’s credit history. This information is most usually requested by lenders as a means of determining whether or not someone is worthy enough to lend money to.

Many different kinds of information can become part of your credit report. For example, the fact that your application for a credit card was rejected is likely to appear on the report. Also on the report will be information about your mortgage payments and whether or not you pay them on time. If you have filed for bankruptcy, this fact will also certainly be a part of your credit report.

Credit reports are generated by companies that collect and collate this kind of information for a living. They can then sell credit reports on a person to interested parties such as banks, credit card companies, and employers. Today, the industry is dominated by three credit bureaus. These companies are Equifax, Experian, and TransUnion. Information these companies have on pretty much every US citizen that has some kind of credit history can include street addresses, mortgage payment histories, credit card bill payment histories, the existence and location of bank accounts, checking account histories, and numerous other kinds of information.

One of the most important elements of any credit report is a person’s credit score. This score is often used by lenders to determine whether or not a person is credit worthy. If a person’s credit score is deemed to be high enough, that person is likely to be approved for a loan. However, if the score is too low, that person may be denied a loan. A person’s credit score is also extremely likely to help determine the kind of interest rate that will be charged on a loan that is offered to that person.

Credit scores are created through very intricate formulas that use different parts of a person’s credit history to determine that person’s credit score. However, despite the complexity of this calculation, certain behaviors are certain to improve a person’s score while others are certain to lower it.

For example, if you pay your credit card bills and mortgage payments on time for a certain number of years, your credit score is very likely to remain high. If instead, you are habitually late on making these payments, your credit score will suffer significantly. Whether or not you have a large amount of outstanding debt will also probably be a very significant factor in determining your credit score.

However, not everyone can simply request a credit report on anyone at any time. The person being investigated must first give permission to others to request this information from a credit bureau. However, refusing to give this permission is likely to result in that person not being offered a loan or even not being offered employment.

If a person does grant a lender the permission to obtain a credit report, that person may be left wondering why her or she was denied a loan. In this case, the smartest thing for that person to do is to pay to receive a credit report on him or herself. Likely, he or she will be able to determine what kind of information lead up to the denial of credit so that behavior can be corrected.

In certain cases, there may even be mistakes on a credit report. If this is the case, people who obtain their own credit reports will be given the chance to contact the major credit bureaus so they can attempt to correct this information.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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