What is a credit reportAmid the uproar over the Equifax breach, you might have wondered why Facebook commenters and news anchors are mentioning the Equifax breach, credit freezes and credit reports in the same sentence. While we’ve provided an in-depth look at credit freezes, it’s been a while since we’ve explained exactly what a credit report is. That’s why we’re breaking down credit reports, both what they are and why it’s so important to pay attention to them.

What is a credit report?

Essentially, if you’ve had or currently have a credit card, mortgage, personal loan, student loan, auto loan, etc., you have a credit report. That’s because a credit report is a record of your credit history and account activity, intended to sum up your level of financial reliability. As such, credit reports contain account information about your credit cards, loan amounts, current debt, credit limits and bill payments and other aspects of your account history, including the account’s open date and the name of the lender. Credit reports also include personal identifiers, such as your name, address, social security number, public records information and more. Each individual has one credit report with each of the three bureaus, Experian, TransUnion and Equifax, and three corresponding credit scores.

It’s important to note that credit reports include both positive and negative information. Derogatory items (e.g., foreclosures, lawsuits or delinquent accounts) can create seven-year stains on your credit reports, and bankruptcy can stay on your reports for up to 10 years. Positive information will stay on your credit reports as long as the accounts remain active and open; closed accounts that were in good standing at the time of closure will remain for 10 years.

Why your credit reports matter

Credit reports are tools that lenders, insurers, rental property owners and often prospective employers use to learn information about you before smacking their gavels to make a decision. This means when you apply for a new account, new insurance, potential employment (if the employer does a credit check), etc., the deciding party will ask the credit reporting companies for a copy of your credit reports — note that they may ask for your credit scores, as well. Although they aren’t the only factors lenders consider, your credit reports and scores have a hand in determining your credit extension, loan approval, interest rates and job or apartment hunt. This means if your credit reports are riddled with missed payments and other derogatory items, the evaluating party will likely not look favorably on your application.

Why is it important to check your credit reports on a regular basis?

Since bad credit reports can draw overcast skies over your future credit card options, job prospects, loan choices and interest rates, it is important to regularly check all three of your credit reports to know where your credit stands and to address any errors — the former is especially true if you plan to apply for anything in the near future. When you check your credit reports for errors, make sure that your name and address on the reports are correct and confirm that you recognize all the accounts as well as their lenders or issuers. You’ll also want to look at the payment history and status of your accounts and confirm that information is accurate. If you spot an error on any of your credit reports, be sure to report it immediately, as it could be negatively impacting your credit.

Make sure you check all three credit reports

It might be tempting to just check one credit report from one credit bureau, but this shortcut could leave unattended wounds on your credit history. That’s because not every credit bureau receives information from the same sources or lenders, which means your TransUnion and Experian reports might list one credit card, but your Equifax credit report might not. As such, it’s best to check all three of your credit reports if you want to know (and you should) how good your credit history actually is. Check out our guide to three-bureau credit report monitoring to learn more.

How to check your credit reports

Federal law entitles you to three free credit reports every 12 months through AnnualCreditReport.com, a U.S. government owned-and-operated website. If you’ve already checked your reports within the past year, there is another option — enlist the help of a credit monitoring service. These services monitor the activity on your credit reports to alert you when information appears or changes. What’s more, our top-rated services provide you with all three credit reports and scores upon signup, and a handful of them come with free trials or money-back guarantees. This means that you can sign up for these services, and if you end up not seeing the value in them, cancel the services before the trials end or take advantage of a guarantee without losing money. Visit our reviews of the best credit monitoring services to find the right one for your credit-checking needs.

Especially after the Equifax breach, it’s important for you to be able to answer the question, “What is a credit report?” With the help of credit report literacy and proactive checkups, you’re more likely to be able to protect yourself from financial and credit-related identity theft. Want to learn more about credit? Follow our credit monitoring blog to get more information.