What is a credit report?

A credit report is a report of your credit file, which contains items that people such as credit bureaus, lenders, credit card companies, creditors, employers, and businesses can use to assess your credit worthiness. Credit reports contain four parts: personal identifying information, credit accounts, matters of public credit record, and number of hard credit inquiries. These are all explained in detail later.

In the United States, there are three major credit reporting bureaus — TransUnion, Experian, and Equifax. Each of them keep a separate credit file on you independent of each other. Also, in general they have different business relationships with different creditors, companies, and businesses, so they have different avenues of information collection. Thus, it is understandable and possible that your three credit files with the three different major credit reporting agencies may contain different information. When you are checking your credit report regularly, you should look at your credit file with each of TransUnion, Experian, and Equifax, or opt for a 3 in 1 credit report option that contains all three credit files.

In general, an item that is on your credit report will stay in the report anywhere from seven to ten years. This is something to keep in mind when you are trying to improve your credit worthiness and credit score, as this is how long a positive or negative item will be a part of your credit file and credit report.

What exact information is included in a credit report and what is not?

The first part of any credit report and credit file is personal identifying information, including items such as current and former names and aliases, social security number, current and former addresses, date of birth, and relevant spousal information. The second part of a credit report file contains information and listings of your current and previous credit accounts including payment histories, account balance averages, and any details of any late and delinquent payments. The third part of a credit report are credit matters of public record such as bankruptcies, tax liens, and court judgments involving finances. The fourth and last part of the credit file contains instances of hard credit inquiries which are instances of creditors and lenders requesting a copy of your credit file upon your application for a credit account or loan.

Some information and matters that may appear to relate to credit history or credit file to someone are not included in credit files. These are things such as bank savings accounts, bank checking accounts, certificate of deposit accounts (CDs), stocks and brokerage accounts, debit card accounts, income, employment history, rental or home ownership history, and soft credit inquiries. Hard versus soft credit inquiries are explained later.

I hear about hard credit inquiries. Are there hard and soft credit inquiries, and how do they pertain to credit files and credit reports?

A hard credit inquiry refers to those instances of banks, creditors, and lenders requesting a copy of your credit report in order to assess your credit worthiness. These instances are included as a part of your credit report. Other times, banks and credit card companies may request general information from credit reporting agencies to identify individuals to whom to send credit card and loan offers or mailings are known as soft credit inquiries, and these are not included as part of a credit file. It is actually a good idea to notify the credit reporting agencies to disallow these soft credit inquiries since these junk credit offer mailings are a significant source of identity theft.

What is a credit score?

A credit score is a numerical representation of what is in your credit report file and thus your credit worthiness. There are lots of different systems for assigning a credit score to a credit report file, but they operate on the same basic premise. Each item in the credit report, whether positive or negative, is assigned a numerical representation and the total of the numerical items is your credit score. Along with a credit score, the system usually can also provide designations and general guidelines what what credit scores denote poor, bad, good, or excellent credit worthiness.

FICO is a popular system of calculating a credit score that is used by most banks, creditors, and lenders. For a FICO credit score, the average score in the US is 723 out of a range of 340 to 850 with scores at the extremes being very rare. Any FICO score in the high 700’s to over 800 is excellent while a FICO score of 700 or above is generally considered as a good credit score. When you are purchasing a service to see your credit score, it is best to make sure that the score you are getting is a FICO credit score especially if your purpose is to see the numerical number that those creditors and lenders would see.

Although a creditor or lender will look at your credit score which reflects only items that are in your credit report file, they may also consider items which do not appear on a credit report such as income and employment history.