What is a Credit Report Used For

Your financial security depends on how others see your credit history. When you apply for a home loan you will not be given a chance to explain that you tried to make a car payment, but were late due to a banking error. All that will matter is what can be seen on the credit report. If you find yourself wondering at times “what is a credit report used for?”; you should understand that when you need credit, lenders will seek information from credit reporting agencies. Your dreams could be forestalled if your credit score is not what it should be.

Your credit report will reveal if you own your home, how many times you might have moved, how well you pay your bills, how much credit you have, what types of credit are available to you at this time, and whether you have ever been arrested, sued, or filed for bankruptcy.

In the United States of America the information is collected, organized, and stored on large databases by three large credit reporting bureaus. In the United States, your credit report will be sold to your lender by one of the following: Equifax, Experian, or Trans Union.

Many different lenders or companies who are interested in your credit history will want to buy this information from the credit reporting agencies. If you want to rent an apartment or building, the person taking your rental application will want your credit history to see if you will pay rent on time. If you want insurance, insurance companies will also want to know if you will pay on time. Credit card companies need to know if you are a good risk as a client, and even employers want to know if you have been sued or have financial issues. Other businesses might want to know your credit history before offering your special deals, and of course when you want to buy a home, the mortgage company will need to see your credit report.

To understand what a credit report is used for, think of the information lenders want to see as broken down into four types. They want to know who you are exactly. This means your name, any names you might have gone by in the past, current and former addresses, social security number, year of birth, and former employers will be in the report. The report will also give them your credit information including where you have bank accounts, stores where you have credit, credit card issues, utility companies you use, and other lenders. The report will also have public record information such as state and county records regarding tax liens, bankruptcy, or judgments against you. Lastly, it will let the lender know if you have been making inquiries and will give the names of those companies who have been looking at your credit report within the last two years.

Credit reporting agencies collect this information from everyone who has given you credit in the past. It is the lender who makes the decision whether or not to give you a loan or line of credit; the credit reporting agency only assesses your credit.