credit report
A credit report is a detailed written account of a credit history. A credit report is prepared by a credit bureau , using financial information collected from various sources, such as creditors , public information, and financial institutions . This information includes a consumer’s identifying information (current and previous addresses, Social Security number, and employment history), as well as their history of loans, credit cards, bills, accounts, payments, bankruptcies, public records and collections, and credit inquiries. For example, a lender may submit account information to one or more major credit reporting agencies , and when a lender conducts a hard inquiry, this inquiry will also appear on the credit report. Additionally, closed accounts will not automatically disappear from a credit report, which typically stays on a credit report for seven to ten years. Customers may dispute any incorrect information on their credit report by following certain procedures. Checking credit reports is often an indispensable part of insurance, employment, housing, and loan applications, playing a key role in determining the outcomes of each application.
Credit reports may be used for various purposes. For example, lenders use credit reports to determine each loan applicant’s creditworthiness, and employers may use credit reports to evaluate a prospective employee’s background.
In order to obtain these reports, lenders are required to follow the procedures laid out in the Fair Credit Reporting Act , namely Title VI of the Consumer Credit Protection Act . The Fair Credit Reporting Act requires that each of the three major credit report bureaus (Equifax, Experian, or TransUnion) provide consumers with a free credit report once a year. The Act also entitles consumers who are on welfare, unemployed (and seeking employment), victims of identity theft, or subjects of adverse action (such as denial of credit, insurance, or employment) to a free credit report from each of the reporting agencies.
[Last reviewed in December of 2024 by the Wex Definitions Team ]
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