Credit Report

What is a credit report?

A credit report is one of the most valuable tools a consumer has when applying for anything from a mortgage to a master card. It is one of the most significant indicators of financial responsibility, and as such, ensuring it stays at a high level is essential.

A credit report is comprised of a number of indicators and takes numerous things into account. It shows creditors or other legit inquirers all your outstanding debt, how often you pay it on time, how often you go over your credit limit, your balance, how long you've had it-basically anything and everything that happens with your credit.

How does it work?

When you fill out a credit application from someone like a bank, credit card company, or store, that information is forwarded to the three major credit bureaus. Even after you fill out a credit application, your information is continually updated. This information includes the status of your credit accounts, changes to your address or other personal information, how often and when you've applied for credit elsewhere and more.

This information is tracked so it can be used by prospective and current lenders to determine how worthy your credit is. By using the information in your credit report, they can figure out the likelihood of an individual, as well as willingness, to pay a debt if it is incurred. Your credit report is also the file companies look at to determine APR (annual percentage rate) on credit.

Why is a credit report important?

A credit report is important because it is the single most important indicator of your financial situation. It is what will allow you to get that much needed loan or mortgage, or that new credit card. It contains all the information lenders need to know before they give you loan. There is no better way to tell about a person's financial habits than a credit report.