Credit reports provide many benefits and lots of value to their users. A lender can save money by getting a credit report on customers who are less than creditworthy. The company might decide not to do business with those customers, potentially saving itself thousands of dollars.
Significance
A mortgage company or other lender can make a credit decision based on a credit report. It can refuse to do business with a potentially risky customer. This could save the company money later on down the line if it helps them to avoid a loss.
Credit Review
A credit card company periodically reviews creditor reports on its customers, after they have been approved for credit. A credit report can identify customers who situation has changed for the worse since they were extended credit. Credit card companies can react by shutting down lines of credits or even closing out an account.
Considerations
A consumer can get a free copy of her credit report once a year (see Resources section). This report is of value to her because she can check it to determine whether it contains errors. Negative items that shouldn't be there could lower her credit score, causing her to pay more for other credit services. She can ask that such errors be corrected.
Prevention/Solution
A landlord can identify a potential candidate who is not likely to pay his rent on time, based on his credit report. If a landlord has to start eviction proceedings after renting to a bad credit risk, that can be time-consuming as well costly.
Effects
A credit report is valuable to the extent that it saves a user money and time during the course of business activities.
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