What Is A Credit Report And How Does It Work?What is a credit report? Is the question most people that are new to the credit system would ask? It’s a question common among teenagers and some foreigners that recently moved to the country. A credit report is a financial document that is created on each individual that uses the American financial system.
It contains a very detailed account of how you have been extended, used and managed money given to you on credit. A credit report contains just about all your personal information which includes your Name, address, date-of-birth, social security number and even your employer.
When you apply for credit to make purchases for goods and services that instance is recorded on your credit report. If you are approved, that creditor and the credit limit extended to you is recorded on your credit report.
Credit reports are created by for-profit businesses known as credit bureaus.
They recruit creditors as members, these creditors feed the bureaus up to date information on how you are making your payments on the credit that was extended to you. Creditors not only feed the bureaus information but also purchase an applicant’s credit report before they extend credit to them.
The relationship between a creditor and the credit bureaus is a two-way relationship.
On the other hand, the better your credit report, the better the repayment terms you will receive when purchasing goods and services on credit.
The three main bureaus are Equifax, Transunion and Experian which are three different companies each in the business of selling reports to financial institutions so they can assess their risk before extending credit to consumers. Related
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