Back to Basics – Credit Report

Last week we talked about the concept of credit and how it’s just an estimate of your ability to pay back a loan. This week we’re talking about how lenders (like mortgage, credit card, or auto loan companies) try and measure your credit.

Your credit report is a statement prepared by a credit reporting agency that includes detailed information about your history of credit activity, current credit situation, and the status of each of your accounts. These agencies (there’s more than one) then provide these reports to lenders when you apply for credit. Instead of each lender having to try and get to know you and measure your credit individually, they use the credit reporting agency and the standardized reports they prepare. It’s more efficient, but of course a credit report isn’t a perfect representation of how likely you are to repay a loan. That’s why its so important that you understand what is and isn’t on your credit report and how to make sure yours is in the best shape possible. We’ve got the details you need right here.