What Is Definition Of Credit Report and Why Is It Important?

  • May 2017
  • Report Templates

What Is a Credit Report and Why Is It Important? 

A credit report presents detailed information on a person’s credit history. A credit report template indicates a summary of your current and previous government identification numbers as well as different type of accounts you had which is past due or is of good standing.

This formal report having a detailed analysis of an individual’s credit history is then graded known as the credit score which represents how credit worthy you are as a borrower to a lender. This score is used to assess your credit applications on any lending institution sometimes in replacement of a credit report.

What Information is in a Credit Report

A credit report is made with the inclusion of these information as seen on the report samples on this website, as follows:

  • Individual’s Information – Your personal information, as recorded in your credit applications, includes the following:
    • name
    • birth date
    • recent and past addresses
    • name of recent and past employers
    • government identification number (e.g. Social Security Number)
  • History of Credit – This pertains to the accounts you have opened in banks. Various report samples in DOC show the formats for this section. This contains information on the:
    • credit limit,
    • monthly balance,
    • and monthly payments you made in previous years.
  • Records Disclosed to Public – Reports under this category pertains to:
    • bankruptcy reports,
    • government tax lien, and
    • civil judgments.
  • Third Party Inquiries – Lending institutions and other parties view your credit report, pulling it out from file which is what they call a recorded inquiry.

Banks update your credit reports depending on the policies they follow on these formal documents. The most common time frame a credit report is updated is on a monthly basis following the duration of when a credit card is first issued to the individual and reported in the bank records.

Why is a Credit Report Important?

Credit reports have certain functions that apply to both the individual and the lending institution. Knowing the reason will aid you in assessing your credit situation and in checking out your credit report. A credit report is important to an individual because of the following reasons:

  • It is evidence of your credit standing. In order for a bank or any lending institution to approve your application for credit cards and loans, they must first seek your credit report to know if you can be trusted to abide by your obligation in paying out the loan.
  • It is the basis for your credit score. Credit score is a numerical based on your credit report. Some institutions ask for this grade instead of the actual credit report. A high credit score entails good information while a low credit score entails some bad information on your credit report.

Report templates and report examples provided on this website shows you what a credit report looks like. You can check your credit report from the credit reporting agencies and institutions. These entities differ from state to state and follow the set standard policies issued by the law. You can ask guidance from these agencies in understanding fully the information on your credit report.