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What Is a Credit Report?

A credit report is basically a list of all of your accounts, as well as a summary of your payment activity on these accounts. It includes documentation of your payment history, your delinquencies, anything that is sent to a collections account, as well as any foreclosures, repossessions, bankruptcies, short sales, tax liens, or judgments.

It also reflects payments that are made on time and accounts that are paid in full, as agreed.

The information included on the credit report is entered into a complicated formula that determines your credit score, the three-digit number that determines how likely you are to repay your bills on time.

It bears noting that lenders then use both of this information—your credit report and your credit score—to determine your creditworthiness. For instance, if you have a great credit score, but your credit report shows unpaid collection accounts, a lender could require that you repay your outstanding debts before it extends a loan to you.

Likewise, employers and landlords can pull your credit report to determine whether they want to hire you or rent a home to you. You could have a great credit score, but if your potential employer sees that you have high outstanding balances and a judgment on your credit report, the employer might decide that you are not as trustworthy as someone with low balances and a clean history of public records. And if a landlord sees that you have been evicted in the past—watch out. You will likely have to explain why you were evicted and convince the landlord that the eviction was a one-time ordeal that will never happen again.

Most information on a credit report falls off within seven years, though there are a few exceptions. Chapter 7 bankruptcies don’t fall off for ten years. Inquiries fall off after two years (though they stop hurting your score after about twelve months). And unpaid tax liens can stay on your credit report forever.