Your credit report contains your payment history, recent credit behavior and available credit. It also shows things like how many payments you have made and whether they were on time, what kinds of loans you’ve taken out, and how many credit cards you have, including when they were acquired.
The report is used to generate a credit score that banks and other lenders use to decide your creditworthiness, which helps them decide whether to lend you money, often in the form of a home mortgage, credit card or car loan.
If you’re approved for a loan, your credit score forms the basis of determining what interest rate and credit limit or amount you’ll be offered. This is important because the loan terms offered to someone with a high credit score compared with someone with a mediocre score could add up to thousands of dollars over the life of a 10-, 20- or 30-year loan.
Your credit score is also a prediction of your future credit behavior, so prospective landlords and employers use it as a screening tool. Similarly, insurers and electricity, phone, cable and natural gas providers may also check your credit.