by : Justin Lee

What is a credit report anyway? Some people lump it into the same category as their IQ results, driver's license number, and cholesterol counts in other words numbers to be aware of but not having any relevancy in our day-to-day life. They assume that when they decide to purchase a home that this is the only time their credit wellness is important. Nothing could be further from the truth.

In its simplest form, a credit report is your financial life history as a borrower. The credit-reporting bureaus, at no effort or expense to you, gather, manage, maintain, and share your information. There are many of these types of reporting agencies, but there are three considered to be the top dogs:

Equifax, Experian, and TransUnion

Businesses rely heavily on these reporting agencies to help them decide whether you are a good risk, and if they should lend you money and at what interest rate and terms. Different people use your credit report for different purposes. Your information is disseminated in many ways:

Lenders use your credit report as a tool to determine your credit-worthiness, or the likelihood that you are to repay a loan. They base how much interest and fees to charge you on your risk profile.

Insurance companies use credit reports to predict how likely you are to file a claim.

Potential employers are getting in the game and using your credit report to help decide if you will be a good employee.

Landlords use your credit report in determining your likelihood of making rent payments on time.

So powerful, and persuasive, is the information contained in your credit report that it may indirectly predict potential behaviors in other areas of your life. Late or missed credit card payments may indicate to a prospective landlord you are likely to be late with the rent as well. If you have had to file bankruptcy, or weren't able to avoid or stop home foreclosure, then perhaps you are not in control in other ways as well.

Your credit report brings squarely into focus personal borrowing and spending habits, and even suggests your personal characteristics. Being aware of what your credit report contains is only the first, but critical, step in addressing and repairing any negative remarks contained within. Call, email, or write the three credit reporting bureaus today and obtain a copy of your personal report. The longer you procrastinate the more money it is going to cost you.

By finding out your credit report score you are taking the first step towards improving your financial status. Many people decide to ignore their credit report and suffer the consequences in the long run. By finding out what your score is and taking steps to correct any mistakes and defend any unpaid bills, you will begin to see your credit rating increase. By increasing your credit score you will see reduced interest rates when you borrow money.