What is a Credit Report?

If you've ever applied for a loan or a credit card, you've probably heard about credit reports. Credit reports are a way for money lenders to hold borrowers accountable for the money they owe, and alert other lenders about bad borrowers.

Function

A credit report lists all of your credit activity for the last 7 years. This includes accounts like credit cards, car loans, home loans and store accounts, and can include accounts from creditors like cell phone companies and cable companies. Bankruptcies are also listed, and remain on your report for 10 years. A credit report states whether the accounts are delinquent or in good standing, if there are or were late payments, if the account has gone to collection and the length of time the account has been open. From this data, lenders can decide on your creditworthiness.

Types

There are three major credit reporting bureaus: Experian, Equifax and TransUnion. All of these companies maintain a credit report on everyone with credit history, but they may not all contain the same information. Lenders are not required to report to all three bureaus, so one bureau may have more or less of your information than the others.

Warning

Because your information can differ between bureaus, it is important to check all three of your credit reports occasionally to ensure that the information is correct and up to date at all three. Each bureau has an online form that you can complete to try to fix any errors. You can also contact them in writing with proof of erroneous information.

Features

The items on your credit report are graded and your credit score is formulated from the data. Therefore, any errors on your credit report should be attended to immediately, as they can negatively affect your credit score. Additionally, having only a short credit history affects your score negatively. Keeping your oldest credit accounts open and in good standing is the best way to lengthen your positive credit history.

Considerations

You are entitled, by law, to one free copy of your credit report each year from each of the three major credit bureaus. To obtain this free report, go to Annualcreditreport.com. All other "free" credit report sites are actually sites that sell credit scores. However, Annualcreditreport.com does not give you your credit score, only your credit report. If you want or need to see your score, you will have to purchase it separately.