Understanding Your Credit Report and Why it Matters

Everyone becomes concerned about their credit report and credit score at some time in their lives. It may be when a loan is needed to buy a home or a new car. Yet your credit report can become an issue at other times, as well, such as when you’re trying to rent an apartment or obtain a new job.

You may have some idea what your credit report is, but many people don’t realize the depth of information these reports contain? Most people who’ve never seen their own credit report are amazed at the amount of information it contains. Your social security number, birth date, present and former addresses, amount of money you earn and even your place of employment are all part of your credit history. If you’ve ever been arrested, sued or filed for bankruptcy, that information will also be included. Information about whether or not you’ve paid off debts and paid your bills on time is also included in credit reports.

Credit reports are generated by credit bureaus, and they receive the information they contain from businesses and other consumer reporting agencies. The major credit bureaus Experian, Equifax and Trans Union collect information on you from a variety of sources, then compile that data into your credit report. They then sell your credit report to businesses, employers, landlords or creditors upon request. You have access to your credit report, as well as information on the sources of what’s reported.

Identity theft is one reason more and more people are regularly checkign their credit reports. The “credit crunch” has also sparked new interest in consumers regarding their credit histories, as it has become more challenging to obtain loans, credit cards and other types of credit. It’s wise to review your credit report on a regular basis instead of waiting until good credit is an issue. Checking up on your credit yearly can help you prevent being denied insurance coverage, employment, the loan you need and even your next apartment rental.

Even those who are confident their credit is excellent are advised to check their credit scores at least once a year. It’s very easy after all for credit bureaus to obtain incorrect information and report it on your credit history. You have no way of knowing what’s in your report until you look at it.

You can have incorrect or outdated information removed from your credit report, but it takes some time. This is why monitoring your credit history is a better approach than waiting until you’re in need of the great credit score you believe you have. It takes some time and effort to monitor and improve your credit history, but it’s essential if you want to obtain favorable loans, credit approvals or enjoy a host of other benefits associated with a great credit score.