Credit Report

A credit report is a file of information about a consumer's borrowing and repayment history, maintained by a credit reporting company and used by lenders and other businesses as one input when evaluating applications. In the United States, three nationwide credit reporting companies — Equifax, TransUnion, and Experian — each keep their own separate files and assemble reports independently, which is why a single consumer generally has several credit reports rather than one. A credit report is not the same thing as a credit score: the report contains the underlying account and inquiry data, while a score is a numerical summary calculated from that data by a scoring model. The contents of a report generally fall into a few categories. Identifying information includes name, current and prior addresses, and other identifiers. Tradelines, or account records, list the creditor's name, the type of account (such as revolving or installment), the date the account was opened, the credit limit or original loan amount, the current balance, the account status, and a month-by-month payment history. Reports may also include accounts placed with collection agencies and bankruptcy filings, which are public records. Many civil judgments and tax liens are no longer included in the nationwide companies' files. A final category is inquiries, which record when a business has requested the report. A hard inquiry follows a consumer-initiated application for credit, while a soft inquiry results from things like a consumer's own request or a prescreened offer. The Fair Credit Reporting Act governs who may obtain a credit report and for what purpose. Permissible purposes include a lender evaluating a credit application, a landlord screening a rental applicant, an insurer underwriting a policy, an employer with the applicant's written consent, and a government agency acting under specific legal authority. Consumers may also request their own reports. The Fair Credit Reporting Act gives consumers the right to obtain a free file disclosure from each nationwide credit reporting company, and AnnualCreditReport.com is the federally authorized site for requesting those disclosures. The same law gives consumers the right to dispute information they believe is inaccurate or incomplete; the credit reporting company must investigate, and the business that furnished the data generally must conduct its own review. Because each company maintains its own file and receives data from different furnishers at different times, reports from the three nationwide companies often differ in content. Reports can contain errors, such as accounts that belong to another person with a similar name or payments reported inaccurately. Federal law also provides tools related to identity theft, including extended fraud alerts and security freezes, and IdentityTheft.gov describes the reporting and recovery steps for suspected identity theft. Credit reports are used for purposes beyond lending, including employment screening, insurance underwriting, rental decisions, and utility deposits, which is why the accuracy of the underlying data matters to consumers in many contexts.

A mortgage lender that receives an application orders a credit report from a nationwide credit reporting company and reviews the file, which shows an auto loan reported as paid on time for several years, a revolving account with a balance near its limit, and a collection account the applicant states does not belong to them.