You would have heard of the words credit report and credit score more than a few times already in your life. And we are sure, every time, somebody talked about credit report and credit score, there have been many doubts and clarifications you wanted to know. We will try to explain and make you more knowledgeable about credit.
In this financially troubling times, learning and being knowledgeable about credit is very important. The earlier you start the comfortable your life would be. Saying that, remember better late than never? 😀 When people refer to these phrases, they more often than not, use these two phrases – credit report and credit score – interchangeably. Many people think they both mean the same thing. But they do not! They are related but they are not the same !
Some of our visitors requested us to do a series of articles discussing about credit reports, credit scores, credit bureaus, how to increase your credit score, how to clean up credit reports, how to clean bad credit scores and many other related articles. And so here we are… Hopefully the short articles at explainstuff.com will meet your expectations in defining and explaining what is a credit report ?
In the first of these articles in this Credit report series, we will define Credit Report. Before we delve into the articles, we need to first understand what a credit report actually is. You don’t expect a baby to understand complex mathematics problems involving integrations and differentiations without teaching him numbers do you ? It is the same thing. So, we will define credit report in basic English without any financial references so that a layperson would understand. It is ridiculous to explain/define something and the reader has to lookup something else in the definition.. how many times did you have to do that .. huh? We feel your pain.
Define Credit Report | Credit report Definition | Definition of Credit report:
Most developed countries have a way to track each and every individual, whether it be Social Security Number in USA or National Identification Number (NI) in UK, or Social Identification number (SIN) in Canada. Basically, these are unique numbers that various organizations in those respective nations use when determining the legitimacy of the paperwork submitted by a citizen, whether he is seeking employment, whether it be credit, whether it be mortgage etc. This Identification number in an ideal (indentity theft free) environment is unique. It serves various other purposes as well which we will surely discuss in our later articles.
A credit report is defined as a detailed report of any/all of your credit items/accounts throughout your active credit life. All types of your credit accounts, for example, your credit card accounts, any student loans, mortgage accounts etc are included in a credit report.
So, if you took your first credit card at the age of 18, your active credit life started on the date your credit card got approved. Your first credit item does not necessarily have to be a credit account. But most of us start off with a credit card account. If your parents supported you and your dad/mom/brother/sister/family member let you use their credit or debit accounts, well lets just say you had an awesome debt free financial start to your life :D. In those cases, your financial credit life probably started when you took out your first student loan, or it started when you applied for your first car. Whatever the first item may be that you took ‘credit’ for, you entered into the completely new traceable world of CREDIT.
The definition of credit report can also be stated as: The report that has a detailed list of credit accounts, their statuses, payment amounts, total credit amounts, amounts paid off an many other detailed entities of a certain individual, on whom the credit report has been run. This is usually and almost always done using the unique identification numbers (Social Security Number in USA) we talked about above.
Hopefully, you now understand the definition of a credit report and we were successful in Defining what a credit report is. If you have not understood, or have some questions, please feel free to leave a comment so we can try to explain it in a better easier way. In the next article, we will explain what all items can be in a credit report and what are the various types of information on a credit report. If you like our articles, please bookmark our site and share us with your friends and family and facebook. They’ll thank you and be indebted to you forever for educating them financially!