Credit report definition
/What is a Credit Report?
A credit report summarizes a person's credit history and current credit circumstances. The report is used by lenders to decide whether to grant you a loan, and the interest rate to charge; these decisions are based on the risk information stated in the credit report. The report can also be used by a creditor to adjust the amount of trade credit granted to you.
What Information is Included in a Credit Report?
The information stated in a credit report includes the following items:
Social security number
Residency address history
Employment history
High account balances
Credit limits granted
On-time payments and late payments
The number of times a loan payment was missed
Bankruptcy petitions
Tax liens
Who Creates Credit Reports?
Credit reports are compiled by credit bureaus, which sell the reports to creditors and lenders that want to investigate the credit histories of existing and prospective customers. The largest credit bureaus are Equifax, Experian, and TransUnion. Credit bureaus are required by the Fair Credit Reporting Act to issue consumers a free copy of their credit report once a year, if requested.
How Long is Credit Report Information Retained?
The negative information in a credit report is expunged after seven years have passed, to protect an individual from an adverse credit event that occurred a long time ago. Bankruptcy information is expunged after 10 years from the event.
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Why Should I Review My Credit Report?
Credit reports can contain inaccurate information, which can be a serious issue when you are applying for a loan. For example, if the report incorrectly shows a delay in making payments, this could result in your not being granted a loan. Consequently, it makes sense (especially for borrowers) to periodically review their credit report.