What Are Credit Reports?

Credit reports, or credit histories, reflect a consumer's management of his or her credit accounts, current and past. Additionally, the reports include information such as the consumer's address and his or her legal history, including arrests, bankruptcies, and lawsuits.

Lenders can request and pay for a copy of a consumer's credit report. The lender uses the information to determine if and how much credit to extend to the  Read More...

What Are Credit Reports?

(Continued) consumer. The higher your score, the lower the risk that is associated with extending credit to you.

Who compiles the credit report?

Many agencies compile credit reports on consumers. However, three major credit bureaus, Equifax, TransUnion, and Experian, operate nationwide and maintain credit reports on the vast majority of consumers.

The bureaus collect information from the consumers' lenders, including how they make payments, their current level of debt, how long they have had credit accounts, the number of recent credit inquiries, and the type of credit accounts the consumer has. Additional factors that are considered in a credit report include whether the consumer has filed any bankruptcies, undergone repossession of his or her home, been sued, or been arrested.

Thee bureaus use the information to formulate a credit score, which is used to determine the consumer's potential risk as a borrower. The compiled data includes information gleaned from department store card accounts, auto loans, mortgages, and credit card accounts, as well as other sources like public records. The scores vary slightly across the three bureaus since they each use a slightly different method of calculation. Each bureau uses a variety of information to derive their score.

A negative credit history impinges upon the consumer's credit score and lowers it. The negative credit factors include bankruptcies, tax liens, repossessions, delinquencies, failure to make payments, and too many credit inquiries.

What does my score mean?

A credit score ranges between 300 and 950. Consumers with higher scores of 680 and better will receive prime rates, or better interest rates, on their loans and other financial accounts. Moreover, they will encounter fewer difficulties applying for new credit accounts, installment loans, or mortgages.

Consumers with scores less than 680 but higher than 560 will encounter difficulty acquiring new credit, including loans. They will most likely need to seek help from sub prime lenders who specialize in dealing with consumers with bad credit. Moreover, the interest rates offered will be higher than the rates offered to consumers with better credit. Anything under 560 is considered a high risk and borrowers will have difficulty acquiring credit of any kind.

How do I get a copy of my report?

Consumers can acquire a copy of their credit report from many online financial organizations for a fee. In fact, the FCRA, the Fair Credit Reporting Act, allows consumers to obtain one free report from each of the three major bureaus once a year.

A free copy of your credit report may be obtained from any one of the three major bureaus at the following website: https://www.annualcreditreport.com/cra/index.jsp. A free copy may also be obtained by calling the toll free number 1-877-322-8228, or by sending a written request to the following address:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, Georgia 30348-5281.

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