What’s Inside a Credit Report – See What Creditors Know

credit report magnifiedA credit report is compiled information on your place of residence, financial responsibility in regards to paying bills, loans you’ve received recently, and judgments or bankruptcies. Its primary purpose is to aid creditors in determining whether you’re a responsible person to lend to and, if so, how much money they can reasonably trust you to pay back.

Sometimes a credit report also plays a role in the hiring process, so having a number of negative items on it can result in being turned down for a job.

Personal Information

Credit reporting companies collect personal information, including your home address, phone number, and birth date. At first glance, this information may not seem useful. However, even a home address has value when creditors can look up the cost of living and property values in that area. From here, it’s possible to deduce the level of income one must maintain to live there. Such information is also useful in preventing credit fraud.

Negative Items

All negative items sent to a credit reporting companies are added to your credit report. Late bills are usually reported after 30 days of noncompliance, but depending on the business, they’re sometimes not reported at all. Bankruptcies are major red flags for creditors which are virtually guaranteed to show up on a credit report a few months after the fact. In general, the seriousness of the negative item determines its likelihood to be reported sooner or later.

Positive Items

Fortunately for consumers, positive credit items are numerous, and some negative items can turn into positives. For example, applying for a new credit line is seen as negative, but if the application is approved, the amount of new credit has the potential to bolster your credit score. Even if it negatively affects your score at first, an older line of credit looks more positive than a new one, so the longer you have a line of credit, the higher your score.

Other positives are paying bills on time, having a variety of different kinds of credit (a mortgage loan and credit card, for example), and having successfully paid off loans in the past. Since the exact algorithm is a secret, some positives are likely unknown. Age, gender, and place of employment may factor into the equation, but it’s impossible to say.


Though all of this seems relatively simple, millions of dollars and decades have gone into perfecting the algorithms to find trustworthy consumers. Assigning points to each consumer for positive items and taking them away for negative ones is surprisingly effective. It’s not perfect, of course; young people generally have no credit at all, so their credit report is empty besides from maybe a small personal tidbit. Because of this, they’re not viewed as trustworthy, but this isn’t necessarily true. As businesses tweak the algorithms, the importance of each item may change.

Likewise, as credit reporting companies cater to businesses, the kind of items in your credit reports might not be the same a couple decades from now.

Posted on January 23, 2013 by in Credit Monitoring

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Comments & Discussion

3 Responses to “What’s Inside a Credit Report – See What Creditors Know”

Felix Lee January 26, 2013

It’s scary how much information someone can get from your credit report. It’s good to know you can eventually turn negative items in your credit report into positive items!

Wes January 28, 2013

Hi Felix,
Not all of them, of course. But yeah, it’s definitely nice to know there’s hope for many of them.

Sarah Park February 7, 2013

I am not really comfortable with those credit report companies. They get too much information from you.