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The Resource Center Credit Fraud & Credit Monitoring | article

The Facts about Credit Reports

A credit report is a basic summary of all of your borrowing activity. The document gets created as soon as you begin opening up accounts in your own name, whether those are a line of credit or a cable bill. Essentially, the credit report helps explain to a lender what kind of borrower you are in terms of how much debt you are capable of handling and how good you are at making regular payments. This can then dictate how much money a lender will be willing to give you, or if they will be willing to let you borrow at all.

What your credit report tells lenders
Most lenders look at how large your debt is when reviewing your credit report. If you appear to already be carrying a heavy load when it comes to money that you have yet to pay off, the lender may be apprehensive about making your burden even greater. They will also be looking to see if you are late on any payments, as your report will highlight any missed payments you have been responsible for as well as their frequency. A good credit report will have minimal late payments and a debt burden that is manageable given your income. On the flip side, a poor report will have defaults, delinquencies and a debt that is likely to continue mounting.

Why review your credit report?
You should check your credit report for a variety of reasons, the main one being to make sure you don't have any strikes on your record that could prevent you from borrowing in the future. This report can function as a road map to help you make informed financial decisions that can lead to better credit habits which could make you a more attractive borrower to prospective lenders.

Checking your credit report can also help you watch out for possible signs of identity theft. If you look over the document and see accounts that you never opened, it's possible someone may be committing fraud using your name or Social Security number. If you don't check your credit report, this fraud could go undocumented and blemish your otherwise good credit standing.

Where to get your credit report
There are three major credit reporting bureaus that will provide you with your credit report every year free upon your request — TransUnion®, Equifax® and Experian®. You can review them at any time throughout the year, but keep in mind that you may be charged a fee for multiple reports from the same bureau.