Credit Report Definition: A credit report is a comprehensive breakdown of a person’s credit history. It contains personal information like your address and social security number and has complete details of credit habits good and bad alike.
Why Is a Credit Report Important
Creditors, employers, lenders and the likes all request your credit report to make decisions about you. To show your credit worthiness you have to have a good credit report. For that you need to be careful with managing finances which includes spending as much as you can manage to pay back and paying your credit debts on time.
Each of the three nationwide credit reporting companies of USA – Experian, Trans Union and Equifax – are required to provide you with a free credit report every 12 months upon request. The reports between these three companies are more or less the same with little differences here and there.
You can get your free credit report from the three companies at once or one at a time after every 12 months as desired. You can say that the way you repay your loans and pay your bills makes up your credit report.
No one wants to have discrepancies on their credit report but at the end of the day some credits are paid early, some are paid late while others are paid on time.
Paying your credits on time is probably the best option there is and shows a strong command of managing credits. Paying off a loan early is good in the sense that it may save some interest, however, some contracts have an early repayment penalty one should try to avoid.
For a person trying to build a credit history, say where they had none in the before, it is best to pay the loan on schedule to demonstrate their good management skills as they await approval for other credit accounts or issuance of a credit card.
Paying a loan late or making payments behind schedule does not produce a good credit report but in turn, can hinder approval of future loans and even employments.
How can young people who have no credit history establish one and have a good credit report?
Student loans are regarded as good credit but they can never be erased even by filing for bankruptcy. Student loans give a good starting round for a credit report that speaks well of a citizen if the are paid on time. It is possible to defer them legally too and this should help solve the problem of incurring bad credit worthiness if a late payment is about to show up n your credit report.
Even in this ‘good credit’ repaying the loan is the only answer to a good credit report.
Repaying your loans is the cornerstone of a credit report, how you repay your loans (early, late or on time) is the real content of your credit report and is what makes them valuable in the first place.
To be on the right track one should keep records, plan properly and always remember to pay your debts on time.