Basically, a credit report is a file held by a credit bureau on you. Creditors will refer to your credit report when deciding whether or not to give you a loan or extend you credit. When a company makes a decision about financing, that decision often rides on the information the company finds in your credit report.

Just What Is It?

A credit report includes your current and past financial information. By looking at your credit report, a creditor can tell whether you pay your bills on time, to whom you still owe money, and if you have defaulted on any loans in the past.

The credit report also informs creditors if you have claimed bankruptcy or had serious financial problems in the past. This in turn helps them decide if you are a good or bad risk. Thus, the results of the credit check help a potential creditor decide whether or not they want to work with you and if they do how good the terms of your loan will be.

Does It Really Matter?

You might be thinking – does it really matter? My credit is not top notch, but I do not think it is that bad. What difference can it make? On a major loan like a home mortgage, the quality of your credit can make a difference of thousands of dollars.

Your credit report is something you want to make sure is as clean as possible. And if it is not, you should try to correct any problems and do your best to get back on track.