How Does a Credit Report Get Put Together?

What Is a Credit Report?

Your credit report contains important information for lenders who are considering taking you on as a borrower. It shows your credit history and how reliable you are at paying back what you owe. The report is also used to calculate your credit score. This score is what lenders will look at when they are deciding whether to lend you money and what interest rate to assign to a loan if they give you one. Smart consumers work hard to keep their credit scores high. Understanding how your credit report is put together is essential to keeping your score high.

What Information Is on the Credit Report?

Your credit report contains information from all lenders you have had in the past or present. Most lenders report to all three of the major bureaus, but some only report to one, which is why the credit reports can be slightly different. Your credit report contains a summary of your open and closed accounts, the balance and credit limit on each one, the type of account it is, your repayment history and your personal information, such as your name, address and Social Security number. It also contains information such as liens against your name and any bankruptcies you have declared. Finally, it includes information about inquiries made into your credit history.

How Credit Bureaus Get the Information

Any time you have credit, whether it be a loan, credit card or line of credit, it will show up on your credit report. Consumer reporting agencies, such as the three credit bureaus, Equifax, Experian and TransUnion, collect this information from your lenders. Each month lenders report new applications and payment histories for their customers to the credit bureaus. Information such as the type of account, your address and name as stated on the application, and your payment history are included in the information that the lenders pass on to the consumer reporting agencies. The credit bureaus also pull information about liens and bankruptcies from public records.

How Credit Scores Are Calculated

The information on your credit report affects you when lenders pull your history and look at your credit score, which are calculated using a specific formula and the information on the credit report. The most important factor that is considered when calculating a credit score is how well you pay back your bills, which accounts for 35 percent of your total score. Next in importance is your debt-to-credit limit ratio, or the amount you owe in proportion to the amount you can possibly borrow on your accounts. This is 30 percent of your score. The length of your credit history accounts for 15 percent of your score, and the mix of credit types is 10 percent of your score. Finally, the number of new credit applications you are filling out, which is indicated by the inquiries into your score, accounts for 10 percent of your score.