What are Credit Reports? Why Do They Matter?

Lenders usually look into several parts of a borrower’s finances before they approve a loan; however, the majority usually look at your credit score and repayment history when considering whether to finance you or not. To discover your past credit history, lenders typically seek out the three major credit agencies and review your credit report. Equifax, Experian, and TransUnion collect data regarding every borrower and, for a fee, give that data to lenders to help them decide on the borrowers likelihood of speedy repayment. The credit report also details your address, employer, as well as any public records, such as bankruptcy, and credit card debt.

The majority of those in the U.S. have credit reports that show credit card payments and payments on loans or other installment accounts. These payments are then calculated using the FICO scoring system and the output (a number between 350 and 800) us used to determine whether the borrower – you – can be trusted.

Your past payments, if made on time, are the most important factor when trying to get more credit. Usually, lenders won’t offer credit to people who don’t have a credit history – not to mention, those who have repossessions, leins, foreclosures, bankruptcy, or 30-, 60-, 90-day late payments. If you find yourself in the latter situation, take care to not accept any advertisement that shouts immediate debt relief – especially to those with poor credit. Any lender worth working with should always use your credit report as a basis of the loan. Of course, approval by the lender is solely at the their discretion. No borrower can be sure of whether they will get a definite loan.