What is Credit Report? How Debts Collections Affect your Credit Score

What is Credit Report?

It is a summary of all your credit history, and other reported information to credit bureaus by your creditors. A creditor or lenders use this report in their decision-making process to decide if they need to extend the credit for business or not. This report contains all the list of your present and past credit accounts details and loans reported by financial institutions. The Credit Reports also used by rental or insurance companies to make risk decisions.

For that, it is important to check credit score regularly to ensure that all the information are correct.

How debt collection affects your credit

Reality is that an account in collections will be noted on your report of credit and it is a major red flag to the bureaus of credit. Unpaid bills or debt can indicate you may be not responsible with your finances. Once a collection finds your report of credit, your score of credit can drop severely. Your credit score drop is dependent on how recent the collection is.

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