What is a credit report and how important is it?

Posted on jun. 27 2022 By: Oneblinc 5 min. read

If you are new to the financial world, you may have wondered: what is a credit report? This is one of the main documents asked for loans and the one that impacts your credit score, known as FICO. 

Maintaining a good credit report gives you more chances to pass through credit risk analysis. Credit cards and different types of loans use this information to determine your creditworthiness and the risk of loss for the lender. That’s why it is common to ask “what is a credit report?” before any attempt at a loan. 

What is a credit report?

A credit report is a document that details each person’s credit history. Every payment, loan, and debt are indicated in this file after the credit bureau analyzes one financial life. So if you think some details will go unnoticed, it is the contrary. After 30 days of late payments, it will be written down with your personal registration.   

But it is not just the negative aspects that will be listed on the credit report. All payments on the right dates can be a sign of good behavior, responsibility, and your ability to pay monthly expenses, even if you are short on money. 

In that case, it is better to pay what you can and notify the reason for not paying it all than let it become a late payment with fees. Credit agencies and lenders see it as an attempt to maintain a good relationship to keep up with the agreement made at the beginning of the loan. 

A credit report is also a full record of both your personal and financial information. In general, it may include: 

  • Identifying information: name, social insurance number, date of birth, current address, and occupation;
  • Credit activity/ history: all your payments to finance companies, including the list of banks and lenders of the last loans, the amount of each loan, the limit for credit cards, the frequency of payment, and the late payments;
  • Public records: any bankruptcies can be accessed for all financial institutions and affect creditworthiness. 

What is not included in the credit report?

If your doubt was not just “what is a credit report?”, but “what is kept away from this document?”, you don’t have to worry about your sensitive information. Even though the credit bureau includes basic details (such as address), your telephone number, income, ethnicity, criminal record, political party, and medical history are not included.

All of this information must be private as a matter of protection. Privacy is also kept when it comes to payments with cash and cheques. Credit agencies don’t control nor analyze how you spend your money in daily life, unless it is on credit cards, because it is easier to track than all cash payments.

 A man reading his credit report.

How can you access them?

Your annual credit report is done by credit bureaus every 12 months. Under Federal law, you are entitled to a free copy that can be accessed on the Annual Credit Report, the only source for free credit reports authorized by the government. 

On this website, you can request all your documents from Experian, Equifax, and TransUnion. These are the three main credit bureaus in the U.S., responsible for sending your credit reports to financial institutions, such as banks and other lenders. 

How are they used?

To understand “what is a credit report?”, you may have associated it with the term “credit score”. It is correct to match them, but they are not the same thing. The score is determined through the information of the report by different formulas that calculate your credit risk. 

That means that each person has a distinct ability to pay, rated in scores. If it is a high one, it can offer benefits such as easier acceptance of loans, reting properties and taking credit cards. 

A good thing about credit scores is that you can have more than one according to different companies that use the reports. Each institution has a credit scoring system and usually determines it by payment history. 

Credit reports are also used as criteria for many loans not only to show your ability to return the money but as an indicator of the changes in your financial life. If you pay all your debts at once, it shows your income has changed. If you have more than one credit application in a short period, it can be a sign that you are facing financial challenges, which may cause difficult payments. 

Why is it important?

If you want to know how to remove late payments from credit report, unfortunately, it is not possible. After 30 days late, it is notified by credit bureaus and stays for a long period. What you can do to avoid late payments is to make partial payments and negotiate with the lender. 

Once you have late payments recorded in your credit report, it may be harder to get another loan, especially for larger amounts of money. It is a risk that only a few institutions are willing to take. 

Credit report x loans

Even though many institutions make it harder to get a loan, it is not a problem at OneBlinc. We don’t check credit because our cutting-edge technology allows us to qualify creditworthiness with a different algorithm.  

With the results from our analysis, we can identify your financial profile and determine your ability to repay the money you want to borrow. Making things easier and helping you to get extra money is what we look for. 

OneBlinc is the right way!

Now that you don’t need to ask “what is a credit report?” anymore, you understand that it doesn’t impact your application for loans at OneBlinc. Get to know us and apply for the loan that will help you pay all your bills and unexpected expenses! 

 

About us

Unexpected things happen more often than we would like them to. That’s why OneBlinc is here to help, whether you have an emergency or just need that extra cash to go through the end of the month. We believe in people, and we understand that everyone might need money someday, somehow.