A credit report documents the current status and history of an individual or company’s credit standing. This includes personal information, credit information, credit score, and credit inquiries. A credit report is compiled by credit bureaus and is used mostly by creditors to assess the credit worthiness of an individual or company that seeks to borrow money from them.
Although credit reports are used primarily by lending institutions, people have the right to access their own credit report at all times. Furthermore, not all financial institutions have the right to access a person’s credit report. Only individuals and companies with which a person has an established business relationship have the right to access a person’s credit report. To ensure that no unauthorized entity gets access to a person’s credit report, the person also has the right to get a list of every single person and company that has accessed the report.
When assessing a borrower’s creditworthiness, lenders usually look into specific information provided in credit reports, including currently open credit accounts, missed payments, maxed-out credit limits, hard inquiries, and the amount of a borrower’s debt compared to his/her income. Lenders do not just count the number of open accounts, but the history of each account. The more bad history is behind each credit account, the less credit worthy a borrower will appear.