Why a Credit Report Is Important

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Your credit report is a record of your current and past debts, including your payment history. It's important because it can impact so many areas of your life, such as your ability to rent an apartment, buy a house or car, get a loan, and even be hired for certain jobs.

What Is a Credit Report Used For?

A variety of businesses check your credit report to make decisions about you. Banks will check it before approving you for credit cards and loans, including mortgages and auto financing. Potential landlords will review your credit report to decide whether to rent to you. Some employers even check credit reports as part of the job application process.

Your credit report is the sole source of information used to calculate your credit score, a three-digit number that lenders often use to determine how likely you are to pay back or default on a loan. They might use your score instead of, or in addition to, your credit report.

High credit scores generally indicate that your credit report includes positive information, while low credit scores indicate the presence of negative information. Usually, the higher your score, the more likely you are to be approved for a loan.

What Does a Credit Report Include?

Your credit report includes basic identifying information like your name, address, and place of employment. It also contains detailed information about your debts, account history, and credit inquiries as well as some public records.


You might see misspellings of your name or other incorrect information on your credit report. This could be due to a reporting error, but it could also be a sign of identity theft, so it's wise to report and dispute this and any other errors as soon as you catch them.

The report shows your account histories, such as for credit cards and loans, including information such as the date you opened the accounts, your credit limits, loan amounts, your account balances, and payment history, including any late payments. Bankruptcies are also listed in a separate section of your credit report.

Credit reports also include a list of the businesses that have checked your credit history in the past two years, either as the result of an application you submitted or because they were prequalifying you for a promotional offer. These credit checks are known as "inquiries."

Inquiries can be "hard" or "soft." Hard inquiries are the results of loan applications you've made and preapproved credit offers, and they'll affect your credit score. A potential employer checking your report would result in a soft inquiry, as would checking your own credit report.

How a Credit Report Is Compiled

Credit reports are maintained by businesses known as credit bureaus or credit reporting agencies. There are three major credit bureaus in the United States: Equifax, Experian, and TransUnion.

Creditors you do business with send your debt information to one or all of the credit bureaus, who then update that information in your credit report. Most of the information on your credit card and loan accounts is updated monthly on your report, but it can depend on the creditor.

Credit bureaus also get information for your credit report from public records. But they don't report lawsuits against you, such as if a creditor sues you for an unpaid balance, until the lawsuit is resolved, and the court has determined that you must pay. The lawsuit won't appear if the court ultimately finds in your favor.


Public records information on your credit report used to include civil judgments, tax liens, and more, but it's only included bankruptcies since 2017.

Other types of businesses, such as utility companies, don't usually update your credit report with your monthly payments, but they might notify the credit bureaus if you fall seriously behind with your payments or if your accounts go into collection. Your cable bill isn't automatically included in your credit report, but it might be listed there as a debt collection if you fall more than six months behind.

Health care facilities don't report debt directly to the credit bureaus, but unpaid medical bills can appear on your report if a collection agency becomes involved. Medical providers might turn your account over to a collection agency if it becomes significantly past due, but all three credit bureaus will wait six months before putting medical debt on your credit history, to give you time to resolve the problem.

Checking and Monitoring Your Credit

It's important that you periodically review the information in your credit report to make sure it's accurate and positive, because it affects many parts of your life.


You can request weekly credit reports from each of the three major bureaus at no cost through AnnualCreditReport.com until April 20, 2022. Your credit score won't be on the report, however, so be sure to check that through a free credit score provider.

You should check your credit report from each of the three major bureaus at least once a year to make sure the information listed on it is correct. Monitor your credit report more frequently if you suspect you've been a victim of identity theft. You also might check your report more often if you're actively trying to repair your credit or if you expect to apply for a major loan soon.

It's wise to report any mistakes or suspicious activity in your credit report, both to the credit bureau and to the company that submitted the information. You can report them on the U.S. government's identity theft website, IdentityTheft.gov, if you have reason to believe the errors are due to identity theft.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Consumer Financial Protection Bureau. "What Is a Credit Score?"

  2. myFICO. "What's in Your Credit Report?"

  3. myFICO. "Credit Checks: What Are Credit Inquiries and How Do They Affect Your FICO Score?"

  4. TransUnion. "How Long Does it Take for a Credit Report To Update?"

  5. TransUnion. "Public Records."

  6. Experian. "Can Utility Bills Appear on Your Credit Report?"

  7. Experian. "Can Medical Bills Hurt Your Credit?"

  8. PR Newswire. "Equifax, Experian and TransUnion Announce Extension of Free Weekly Credit Reports to Help Americans During COVID-19."

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