What is a credit report

What is a credit report

A credit report is a statement of your all financial status including loan paying history, credit level and debt status of your credit accounts. Lenders use credit reports to consider your creditworthiness before lending any loan or additional credit.

Your credit report tells a story of how you borrow a loan and manage to pay off the credit debts. All customers’ data is updated monthly basis from all lenders by credit-reporting agencies (Equifax, TransUnion and Experian) which makes the information updated and be useful in all aspects of your personal finance.

This information contains how much credit you get, how much your credit is free, how much credit you used, whether your payment paid on time, how much you owe. Furthermore, if you experienced a bankruptcy, financial fine, rental payment, etc, they could be all recorded in a piece of your credit report.

What is in your credit report

  1. Personal data: your address, occupation, social security number
  2. Credit history: payment behavior, loans, used credit, payment due
  3. Detail of credit accounts: all loan or/and credit card status are listed here
  4. Inquiries into your credit history: how many time lenders require your credit report, what kind of information they grabbed
  5. Public information of other properties, liens, judgments, bankruptcy.
  6. Information on how to argue on all credit status

Why you need to care about credit report

All lenders use it definitely this piece of paper before your new loan, determine your interest rate with this amount of money. If you intend to rent a new apartment, change to new TV cable service, Internet or buy new insurance contract, the side B would require you to access some information on your credit report.

One more reason make you watch out on it that it’s hard and takes 7 to 10 years to clear negative information on your credit report. And once you have a good credit score (from 700 and above), there are many chances coming to you to free from debts as well as enjoy the life with the lowest interest rate ever.

Related story: 5 Essentials to improve your credit score

What you should do now

Because lenders would require your credit score (FICO scores) and credit reports from 3 agencies, so you should ask for your free credit score from all 3 agencies. Keep in mind, the number of inquiries your credit report also impacts your credit score in a bad way, the best practice is to ask for only 1 credit report from each agency in a year and do it in every 4 months.

When getting it in your hand, you must point mistakes on this report and fix it as soon as possible and monitor the outcome in the next report until yours gets a better score.

You also never forget to update it such as your address was changed, you got a new job because beside lenders, landlords and your company would cross check your report to verify your background generally before making any decision on renting or recruitment. Always revise your credit report in advance of applying a new credit card because your accurate and up-to-date information will help you get approval quickly. In case you have to adjust anythings, contact the responsible agency with proofs. The better you control the credit score, the lower rate will be offered to you.

Originally published at yoursmartcredit.com on April 13, 2016.