'Credit Report' is explained in detail and with examples in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
A credit report is an individual or business’ credit history. This includes their record of borrowing and repaying money in the past. It similarly covers data pertaining to any late payments made or bankruptcies that have been declared. In some countries, credit reports are also referred to as credit reputations.
When an American like you completes a credit application for a bank, a credit card company, or a retail store, this information is directly sent on to one of the three main credit bureaus. These are Experian, Trans Union, and Equifax. These credit bureaus then match up your name, identification, address, and phone number on the application for such credit with the data that they keep in their bureau’s files. Because of this match up process, it is essential that lenders, creditors, and other parties always provide exactly correct information to the credit bureaus.
Such information in these files at the three major credit bureaus is then utilized by lenders like credit card companies in order to decide if you are deserving of having credit issued to you by the creditor. Another way of putting this is that they decide how likely that you will be to pay back these debts. Such willingness to pay back a debt is usually indicated by the timeliness of prior payments to other lenders. Such lenders will prefer to see the debt obligations of individual consumers, such as yourself, paid on time every month.
The second element considered in a lender offering loans or credit to individuals like you is based on your actual income. Higher incomes generally lead to greater amounts of credit being accessible. Still, lenders look at both willingness, as shown in the credit report and prior payment history, along with ability, as shown by income, in deciding whether or not to extend you credit.
Credit reports have become even more significant in light of risk based pricing. Practically all lenders of the financial services industry rely on credit reports to determine what the annual percentage rate and grace period of repayment of a loan or offer of credit will be. Other obligations of the contract are similarly based on this credit report.
In the past, a great deal of discussion has gone on considering the information contained in the credit reports. Scientific studies done on the issue have determined that for the most part, this credit report information is extremely accurate. Such credit bureaus also have their own authorized studies of fifty-two million credit reports that show that the information contained therein is right a vast majority of the time.
Congress has heard testimony from the Consumer Data Industry Association that in fewer than two percent of credit report issue cases have there been data which had to be erased because it was wrong. In the few cases where these did exist, more than seventy percent of such disputes are handled in fourteen days or less. More than ninety-five percent of consumers with disputes report being satisfied with the resolution.