What is a Credit Report?

If you’ve ever borrowed money from a financial institution or opened up a credit card account, you probably have a credit report in your name. When you apply for new loans or new lines of credit, a lender or creditor will pull your credit report to get a sense of your financial background and whether you make your payments on time. A credit report shows your credit history and is compiled and maintained by the credit bureaus (Equifax and TransUnion). Lenders and creditors feed the credit bureaus information about you and your accounts, and the credit bureaus compile that information to form your credit report. Because there are three credit bureaus, you have three credit reports which may slightly differ from each other. It’s important to check all three reports to get a complete picture of your credit history. Your credit report will typically include the following:

• Personal information. Name, address, Social Insurance Number, date of birth, and possibly your employer name
• Account history. Information related to any credit cards, loans, or mortgages you may have, including limits, balances, and payment history. Derogatory banking information such as closed-for-cause bank accounts.
• Public Records. Bankruptcies and credit-related court judgments.
• Collections. Any of your debts that have been turned over to a collections agency.
• Consumer Statements. You’re allowed to post a note to your report explaining the reason behind a particular situation, such as bad credit history or fraudulent activity
• Credit Report Inquiries. A list of all of those who have pulled your report
• Ratings. Credit bureaus will rate your payment history using coding, charts, or scales.

Rating Your Payment History

Of all the information contained in your credit report, your payment history is what most clearly demonstrates your creditworthiness. If you pay your debts back on time and in full, lenders will view you as a good borrower. If you have delinquent payments in your credit past, that reflects negatively on your ability and willingness to pay back lenders.

The credit reporting agencies rate your payment history in different ways. Some use codes, such as I2, O2, and R2. The letter portion of the code stands for account type (installment loan, open credit line, or revolving credit). The numeric portion of the code represents how timely your payments are. For example, 1 means that you make your payment on time each month. 2 means that you are between 30-60 days late on your payment. 3 means you are 60-90 days late, and so on. 9 represents bad debt that has gone to collections.

Another way credit bureaus will rate your payment history is with a payment chart that marks each month as: OK; 30, 60, 90, or 120 days late; Payment Plan (PP); Repossession/Foreclosure (RF); or Collection Charge off (CC).