Knowing Why Your Reports Matter

The credit report you get is the same one that your current creditors and potential future creditors use to make decisions about you. The more negative information is in your credit histories (such as past-due accounts, accounts in collection, accounts that your creditors have charged off as uncollectible, tax liens, and so on), the worse your finances are.

Your existing creditors may use the information to decide whether to raise the interest rates you are paying, lower your credit limits, or even cancel your credit. And whenever you apply for new credit, the creditors review your credit record information to decide whether to approve your application, how much credit to give to you, the interest rate you must pay, and so on.

Many insurance companies, landlords, and employers also review your credit record information. If they find a lot of negative information, insurance companies may not agree to insure you or may charge you higher-than-normal premiums; landlords may refuse to rent to you; and employers may not want to hire you or to give you the promotion you applied for.