What Does a Credit Report Do?

A credit report provides information to you and creditors about your past financial dealings. It shows a history of your credit line and how faithful you have been in making payments on time. It is a detailed statement of all the loans you have had and what your credit line has been with those businesses. This report can be very critical for you in obtaining a home mortgage, loan for a car, sometimes even when renting an apartment or applying for utilities. These businesses will check your credit report to determine if you are a good risk or not. It is important for you to know what is in your report and you can by getting a free credit report.

Creditors will want to view your credit score on your credit report. The credit score is a numerical value assigned to your record much like a report card. It is an analysis of your credit history based on the amount of credit you have available, how you have made your payments in the past either on time or late, and how much credit you have when compared to your income. All these factors are included in your credit report. If you get your free credit report, the credit score is not included. You will have to pay a fee to get your score.

A credit report also lets you know what credit you have available in your name. You can get a free credit report once a year from each of three credit bureaus. It is highly recommended that you keep track of your credit report at least once a year. This keeps you informed as to what is on your credit report and what others are looking at when they request a copy of your credit report.

Another reason for checking and using the free credit reports is because sometimes things are listed that is fraudulent and may have been caused because of identity theft. There are also cases where information has been entered by error. Simple mistakes do happen during data entry. By getting and reading your credit report, you will know if these appear in your report and will be able to correct them.

When applying for credit, creditors will want to know as much about you as possible. If you currently have large amounts of indebtedness, a creditor might be inclined to turn you down for a loan. Perhaps you have a long list of previous addresses or a long list of previous employers, this could also indicate you have an unstable financial history and cause you to be denied a loan. Your credit report is used quite frequently and it is of utmost importance that it be accurate. Using the free credit report to check your credit record will assure that none of these items appear erroneously on your report.