What are Credit Reports?

Reports that contain the financial status of a person and his credit history and which are used to determine the credit worthiness of someone are called credit reports. For instance, if you pay your mortgage late or have filed for bankruptcy or are denied a credit card then all of this will find a mention in your credit report.

Equifax, Equerain, Trans Union are the three major credit reporting agencies or bureaus. These agencies keep track of all of your financial dealings like mortgages, repayment history, credit cards, personal and contact information, enquiries into your credit history etc.

They also have a list of the balances of the amounts that are due on your mortgage or your credit card etc. If you pay your bills promptly, then this will get reflected in your credit reports. However if there are any negative aspects like your being habitually late with your repayments and if there is any lawsuit pending against you then they will affect your credit report and score adversely.

This credit history that you have becomes the basis of your credit score. The credit score determines your credit worthiness in the market. For instance, you go out to seek a loan, the lender will first enquire into your credit score from the credit bureau and then proceed. If the score is not satisfactory then chances of your loan becoming sanctioned are less. Or if you are given any credit then it will be at a relatively higher rate of interest.

The consumer seeking the loan actually needs to the give the lender an authorization to actually seek the credit report from the bureau. It is always advisable to get a copy of your credit report annually from all the three agencies and verify it against your bank transaction etc and ask for whatever errors if any to be rectified.

Also having your credit report with you will tell you which areas do you need to improve on.