Understanding Your Credit Report

Talicia Murray
Mar 31, 2022
3 min read

Being versed with your credit report is essential to your financial reliability.

It’s your financial fairy godmother that guides you through financial plans.

Keeping a memory record of your financial history or plan can be challenging hence why a credit report makes it easier to be in sync with your finances.

What is a Credit Report

A credit report provides a record of your credit history, including your paid or pending bills.

It also contains your past and present credit statements and plays an essential role in your financial welfare. The credit bureau formulates it by gathering your financial records and creating a credit report based on that record. Your credit report comes in handy when applying for a loan, applying for a job, or acquiring a credit card. However, if you are not familiar with how it works, all you might see are letters swirling all over your face, hence why understanding your credit report is necessary, and we've got you covered.

Understanding Your Credit Report

Now let’s look at some different aspects of your credit report and what you should pay attention to, exactly, to understand it fully!

Contents of your credit report

Your credit report contains detailed information of your financial history, hence why it’s vital to be familiar with the specific financial contents within your credit report.

These contents include;

● Your credit card information

● Your name, Social security number, and address

● A bankruptcy filing or financial lawsuits

● Your loans record

● Date of your account opening

● Information on early or delayed payment of your bills

Who Requests A Credit Report?

If you think a credit report might not be significant, think again as it comes in handy in certain situations. For instance, when buying or renting a house, your landlord can request a credit report to deduce if you are economical or extravagant with paying your home bills.

A lender or insurance company also emphasizes a credit report to determine eligibility for a loan or insurance.

Credit Report Bureaus

A key point of understanding your credit report is being familiar with the agencies that formulate these reports. A credit report bureau is an agency that collects financial data from lenders or creditors to help a consumer make better loan decisions. The major credit report bureaus are; Experian, Equifax, and Transunion. Think of these agencies as financial guardians that provide you with a better opportunity of acquiring a loan.

Through the credit report created by either of these bureaus, lenders can make lending decisions after evaluating your financial history. Thus, being versed with the credit report agency is a significant step to familiarizing yourself with your credit report.

Maintenance Of Your Credit Report

Aside from formulating your credit report, the bureaus also have the task of maintaining the report. For instance, when applying for new credit, you’ll be asked to present a copy of your credit report. This is where the bureaus step in and provide the creditor with information on your credit history. The creditor will evaluate your credit report to determine if your application will be approved or declined. If the credit application is approved, it’ll be added to your credit report and updated monthly.

Know Your Credit Report Rights

Leaving your financial information in the hands of a credit report bureau is a good idea; however, a better idea is understanding your rights as a consumer to avoid inaccurate credit records. The Fair Credit Reporting Act is a federal law that maintains adequate privacy and accuracy of your credit report. The law ensures that your financial records are accessed and shared by the credit report bureaus fairly and accurately. Thus, knowing your rights is one of the significant steps to understanding your credit report.

Protect Your Credit Report

A credit report helps you detect fraud or identity theft; thus, file a message to your credit bureau if you find unauthorized financial records on your credit report bureau.

The bureau will notify lenders to halt the loan or provide your account with extra security and identity verification.