Infographic: What is a Credit Report and Why Does it Matter?

You’ve almost certainly heard of a credit report before, but many people don’t know a lot about what it involves and what it’s used for. Our infographic provides a quick, handy guide to what a credit report is, what you can expect to find on one, and why your credit report is such an important part of your financial outlook.

What is a Credit Report?

A credit report is a detailed record of your credit history compiled by credit bureaus. These credit bureaus collect financial information about you that gets submitted to them by lenders, credit card companies, and other financial companies to compile your credit report. Lenders use your credit report to decide if they will loan you money and what interest rates you will be offered.

What’s in My Credit Report?

Here’s what you’ll typically find in a credit report:

1. Your personal information, including:
1. Your name
2. Current and former addresses
3. Birth date
4. Social Security number
5. Phone number(s)
2. Information about your credit accounts
1. Current and past credit accounts, such as loans, credit cards and mortgages
2. Account balance
3. Payment history
4. Credit limit or amount
5. Date of the account opening and closing (if applicable)
6. Name of the creditor
3. Credit inquiries made on your behalf by lenders.
4. Public records, including information on:
1. Bankruptcies
2. Tax liens
3. Civil judgments
4. Foreclosures
5. Collections on your accounts, such as:
1. Missed payments
2. Accounts sent to collection agencies
3. Information on overdue child support

Why Does My Credit Report Matter?

Here are some reasons why your credit report matters:

• A strong credit report can help you gain approval for large loans and credit cards with favorable interest rates and terms. A weaker credit report may result in higher interest rates, undesirable terms, or even denial of your loan or credit card application.
• A good credit report can improve your chances of securing a rental property. Similar to applying for a loan account, the people renting a property to you will want to ensure that you’re trustworthy and they can rely on you to pay your rent.
• A better credit report can lead to lower insurance premiums. Again, a good credit report signals to insurance companies that you’re generally less of a risk to them, and typically results in lower insurance rates.