What is a Credit Report?

A selected, short excerpt from Chapter 4 of The Secrets About Good Credit and Debt Reduction

Also known as consumer reports and credit checks, credit reports are documented records of background information and credit activity or inactivity on every individual with a social security number in this country. The credit system issues credit reports to determine our level of performance as adults and consumers, just as the education system issues grade reports to determine the level of academic performance.

We can't discuss credit reports without discussing credit-reporting agencies or credit bureaus. A credit-reporting agency gathers information such as where you live and work, what legal actions have been filed, what bills you have, and how you pay those bills. This information about you is then sold to creditors, employers, insurers, and other businesses. Credit-reporting agencies are private businesses. They are not government agencies. The Fair Credit Reporting Act (FCRA) enforced by the Federal Trade Commission and your state Attorney General clearly states how credit-reporting agencies must conduct their business and what your rights are as a consumer. (see Chapter 7: Know Your Rights)

Credit reporting works in this manner. Let's use Sears department stores as an example. Sears subscribes to the services of the three major credit bureaus: TRW, TransUnion, and Experian. Sears reports to the credit bureau on a monthly basis the payment history of every customer who has an account with them. The credit bureau keeps a file on you and records in your file every month what Sears reports to them. When an employer or creditors asks to see your credit file, the credit bureau generates a credit report. The credit report assists employers, creditors, and insurers with the decision-making process. So if you have three credit cards, a car loan, and so forth, each one is reporting your payment history to a credit bureau. This information will be added to your file. Creditors, employers, and insurers receive this information on a daily basis.

The Secrets to Good Credit and Debt Reduction: A Consumer Self Help Guide is a must for anyone who spends money, especially those who are just starting out, considering bankruptcy, or are in bondage with too much debt. Order your copy today!

The author, D.J. Williams, also writes and publishes a free, bimonthly newsletter full of tips, news and other information about consumer credit and money management.
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