Credit Report

Detailed Explanation

A credit report is a record that reflects a person's credit history, compiled by credit bureaus. Lenders, such as banks and credit card companies, use the information contained in credit reports to evaluate an individual's creditworthiness when they apply for credit or personal loans. 

The information in a credit report includes personal information, such as your name, address, and social security number, as well as details on any credit accounts and loans, payment history, outstanding debts, and the length of your credit history.

Additionally, public records like bankruptcies, foreclosures, and tax liens are also included. Credit inquiries, both hard and soft, made by lenders or others when you apply for credit, are also listed.

Credit reporting agencies (CRAs) like Equifax, Experian, and TransUnion collect and maintain these reports. They gather information from creditors and public record sources, ensuring a complete and updated record of your credit history.

Example

John applies for a mortgage. The lender requests John’s credit report from a credit bureau to assess his creditworthiness. The report shows John’s previous and current credit accounts, his payment history on credit card debts, and a car loan. It indicates a consistent record of on-time payments and responsible credit management, helping the lender decide in favor of approving the mortgage.

Key Articles Related To Credit Report

• 3 Ways To Get A Free Credit Check And Score Report
• Credit Score Ranges and What They Mean for Your Money
• Best Credit Monitoring Services

Related Terms

• Credit Score: A credit score is a numerical expression representing an individual's creditworthiness, based on an analysis of their credit files.
• Credit History: Credit history is a record of an individual's or entity's past borrowing and repayment activity, including loans, credit cards, and other forms of credit.
• Credit Bureau: A credit bureau is an organization that collects and maintains individual credit information, providing this information to lenders and consumers to assist in making informed financial decisions.
• FICO Score: A FICO score is a type of credit score developed by the Fair Isaac Corporation (FICO). It’s used by lenders to assess an individual’s creditworthiness, and is based on various factors such as credit history, debt levels, payment history, and length of credit history.  
• Debt-to-Income Ratio: Debt-to-income ratio (DTI) is a financial metric that compares an individual's total monthly debt payments to their gross monthly income. It is expressed as a percentage and is used by lenders to determine a borrower's ability to manage additional debt obligations.

FAQs

How often should I check my credit report?

You should check your credit report at least once a year to check for any inaccuracies or signs of identity theft.

How can inaccuracies in my credit report be corrected?

If you find errors, you can dispute them with the credit bureau. They are required to investigate and correct any verified inaccuracies.

Does checking my own credit report affect my credit score?

No, checking your own credit report is considered a soft inquiry and does not affect your credit score.

Can I obtain a free credit report?

Yes, in the U.S., you are entitled to one free credit report per year from each of the major credit bureaus.

What is the difference between a credit report and a credit score?

A credit report is a detailed history of your credit behavior, while a credit score is a numerical representation of that information, used to quickly gauge your creditworthiness.