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Although credit reports have been around for a very long time, many people still do not understand what their credit report contains and how it will affect their lives.  Because of this lack of understanding, many people dismiss the importance of their credit report and neglect to review it for inaccuracies or negative information.  The truth is that a credit report is one of the most important financial instruments used today and it can have a bigger impact on your financial future than any other item in your life.

What Is On A Credit Report?

Your credit report is a very important part of your financial future because this is the information that most creditors look at when determining whether you are credit worthy or not.  Your credit report contains a history of every account that you have ever opened and the status of those accounts, whether they are current or have had late and missed payments in the past.  Your credit report also details any credit obligations that you have defaulted on in the last 7 to 10 years, with balance amounts and the length of time since the account has received a payment listed beneath the name and address of the creditor.

Your credit report details your credit history which is used to determine your credit score.  If there are numerous defaults and late payments listed on your credit report, then your credit score will be decreased for every piece of negative information that is reported to the credit bureaus to be listed on your credit report.  Even having a creditor pull your credit report to determine your credit worthiness can decrease your credit score by 5 points per occurrence.

How Does This Affect Me?

If there is a lot of negative information listed on your credit report, it could cause a number of problems in different areas of your life.  Creditors, such as mortgage lenders, credit card companies, and car dealerships, may deny you credit because you are considered a credit risk and they do not know if you will pay back any loan that they extend to you.  Obtaining a credit card from a retail store may be difficult as well, as they also determine whether they should give you credit based on your credit report and credit score.

Credit reports are used in other areas of your life as well.  Some employment positions use your credit report as an indication of your level of personal responsibility and may be reluctant to hire someone that has a bad credit report.  People have also been turned down for apartment rentals because of a bad credit report indicating to a landlord that you have trouble paying your creditors and may not pay your rental payments on time.  Your credit report is very important to your economic future because it can affect so many significant areas of your life.