What are credit reports?

Are you not totally familiar with the term “credit report”? Maybe you've heard the term, but you aren't exactly sure what it means. It's time that you educate yourself on this very important piece of information about your credit history. Today, people use credit to pay for college, purchase homes, buy vehicles, and endless other reasons. Your credit report tells lenders whether or not you are a desirable candidate.

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So what exactly is this credit report? Simply put, it is a record of all your credit activities. It shows any actions that have been taken against you because of any unpaid bills, outstanding loans that you may have, or any credit cards and balances you've incurred.

What Information Does a Credit Report Contain?

• Your name
• Your current and previous addresses
• Your Social Security number
• Your year of birth
• Your current and previous employers
• If you're married, your spouse's name

Credit information includes credit accounts or loans you have with:

• Banks
• Retailers
• Credit card issuers
• Other lenders

Public record information includes any information that's contained in state and county court records, like:

• Bankruptcies
• Tax liens
• Monetary judgments

Inquiries indicate to other credit grantors that you have applied for new credit that could result in additional debt. Potential lenders view multiple recent inquiries on your credit report as a sign that you are overextending yourself.

(A credit risk score may also be included when your report is provided to a credit grantor, although it is not included on consumer review reports. The ways to calculate and use a credit score vary widely, so a score has little meaning outside of the context of a particular lender's unique guidelines for use. Therefore, it is not included on consumer review reports.) LINK TO VIEW

Your credit report is important because it actually has a major impact on the standard of living you will enjoy. A high credit rating opens many doors to opportunities with lenders. It could help pave the way to buy that house you've been dreaming of or replace the automobile that is starting to show its age. On the other hand, a low credit rating can mean you are denied for credit or have to pay high interest rates.

If you are concerned about the condition of your credit report, you don't have to be left in the dark. It doesn't cost you a dime to check the current condition of your credit. The FCRA (Fair Credit Reporting Act) provides that every citizen be given one free copy of his credit report on an annual basis. This provides you an opportunity to view your own credit report, check for any discrepancies, and perhaps set goals to improve your credit rating.