A credit report is a detailed statement that has information about your credit activity and current credit situation. Your credit report contains personal information along with current and historical credit accounts, the credit limit or amount, account balance, account payment history, the date the account was open and closed, and the name of the creditor.
Who Compiles All of This Information?
Credit reports are maintained by credit bureaus and credit reporting agencies. The three major credit bureaus in the United States are TransUnion, Equifax, and Experian. Your debt information is sent by companies you have done business with to the credit bureaus. Usually, these reports are updated monthly, but that is not always the case. Other businesses may not update monthly but will only send the credit bureau information when you have fallen off making monthly payments for several months. Certain bills may not appear on the credit report until such a situation.
Taking a Closer Look at What is in a Credit Report
Although each credit reporting agency will have a different format, generally speaking, your credit report will have these things. Firstly, it will include identifying information such as your name, address, social security number, date of birth and employment information. Secondly, it will have all of your trade lines, which are all of your credit accounts. Lenders report on all of the accounts you have opened with them. They include what type of account, when it was open, your credit limit, the account balance, and your payment history. Thirdly, credit inquiries also appear on your credit report. For example, when you apply for a loan, you give your lender permission to ask for a copy of your credit report. The report will list all of the inquiries over the past two years. These include voluntary inquirers, initiated by you for your own means, and involuntary inquiries, which are typically initiated by lenders. And lastly, credit reporting agencies also gather public record information such as bankruptcies, foreclosures, suits, wage garnishments, and liens.
Why You Should Check Your Credit Report Yearly
It is a good habit to check your credit report once a year to make sure the information on it is correct. It is also a great way to prevent credit fraud and identity theft. If you know you have poor credit, and you are planning to take out a loan, you might check it more frequently to monitor its improvement. There are three ways you can get your hands on your credit report. You can either order it through a free website the government set up, through a promotional offer or by purchasing it from one of the three major credit bureaus.
Is Your Credit Report Important?
This is, of course, rhetorical, for your credit report is indeed very important. Lenders use this to determine if you are creditworthy to take on a new loan or a new line of credit. Landlords review this information, and even some employers require it as part of the application process. Moreover, your credit report provides your credit score, which is a three-digit number. The higher it is, the more positive the information is in your credit report, and vice versa. Some lenders only use this metric or use it in conjunction with the credit report, to determine if they will approve you for a loan. It is the key to the door per se, so do yourself a favor and make sure to monitor it to avoid future headaches.
