Consumer Credit Report

Written by Jessica Duquette
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A consumer credit report is a document that evaluates the history and behavioral patterns as they relate to consumer spending habits. Financial institutions use these reports to evaluate their risk when consumers apply for a loan. When it comes to credit reports, there is a lot of information you should know. The more facts you can dig up about a consumer credit report, the more likely you are to avoid financial hardship in the future.

Why Do I Need a Credit Report?

Most major expenses, such as a home, a new vehicle, household appliances, etc. spark the need for a consumer credit report. Unless you were planning on paying cash for this purchase, you need to enlist the help of a bank or financing institution in order to back your purchase. Before anyone is willing to commit hundreds of thousands of dollars on your behalf, proof of reliability must be shown. A credit report gives financial institutions a snapshot of your risk.

Upon graduating college, you secured a solid job. Forty five minutes from home, you realize you'll need to buy a car in order to make the commute. With no money in the bank you have to rely on the dealership to offer you a loan. Before the dealership is willing to send you home with a brand new Honda Civic EX, they want to find out as much as they can about you.

What Does the Report Say About Me?

By pulling your consumer credit report they find out the following things: open credit accounts, past due payments and the amount of debt that you currently owe. Just how detailed is this credit report? The Sears account you opened five years ago is listed on your report. Though you haven't made a single purchase with it, your consumer credit report uncovers that you could potentially spend 500 dollars in Sears, given your credit card limit.

Additionally, the $15,000 you owe in student loans is listed on your report. Though that seems like a hefty amount of debt, understand that the majority of people have incurred similar loans. The credit report concludes that you are an honest and trustworthy consumer, and more than capable of handling a monthly car payment given your income.

Educate Yourself Before It's Too Late

Knowing the dos and don'ts of credit reporting will help you make the right decisions. Keep in mind, that even the slightest decision, such as opening that Macy's account for the ten percent discount, could hurt you in the long run. By educating yourself on how your consumer credit report can be affected, you are much more likely to avoid financial problems.

As you get older, significant expenses such as your home, rely on a solid credit report. You do not want to find out when you apply for a mortgage that your credit report paints you as an irresponsible, debt-heavy twenty-eight year old. Do what you can to alleviate these problems. Though repairing credit is a long process, the sooner you get started, the sooner you'll be on your way to worry-free finances.


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