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A credit report is basically a complete breakdown of one's credit history. It contains financial data from a wide variety of sources. The reports lists things such as: who you owe money to (utilities, hospitals, landlords and others), if you have been late in making payments, overdrawn accounts and late credit card, auto loan, or mortgage payments. Credit reports can also contain information about child support payments.

Personal details also are given in your credit report. It will include everything from you current address, past addresses, telephone numbers, Social Security numbers, birth date and details about current and past employment. Also contained in the report are public record matters like civil judgments, bankruptcies and tax liens.

The credit reporting industry is currently run by a trio of large national credit bureaus: Experian, Equifax and TransUnion. These credit bureaus run around 1.3 billion credit reports annually, and each of the three bureaus has approximately 225 million consumer credit files on record.

Additionally, the report includes a credit rating, or your FICO score, which range from around 300 to 850. In the US, the median FICO score is about 725. FICO scores above 720 are considered a "good credit" rating, while scores short of 600 are considered to be a "poor".

As the majority of financial choices you make in your life will use the details of your credit report to some extent, it's important to make it as good as possible. At the most basic level it will be used to determine if you will be extended credit, to a lesser degree it may be used to determine the rate you pay for mortgages, loans and even insurance.

While there are minor differences between how your FICO score is calculated between agencies, the standard formula is:

• 35% payment history.
• 30% total debt.
• 15% how long you have been using credit.
• 10% new credit you've requested.
• 10% kinds of credit used. (mortgage good, payday loans - not so good)

• Pay your bills in a timely fashion.
  Even if you've been overdue in the past, every month that goes by in which you make timely payments will improve your score.
• Lower the total quantity of debt you have.
  If you're paying your bills on time, having some debt isn't a bad thing - but if you appear over-extended it'll be difficult to attain new credit.
• Limit your requests for new credit.
  If it looks like you're taking on all the credit you can, most lenders will assume you're having financial difficulties.

In the U.S.A., a federal law called the FACT Act (Fair and Accurate Credit Transactions Act), entitles each legal U.S. resident to one free copy of their credit report from each credit reporting agency once every twelve months. These free reports do not contain numeric credit scores, but will provide any notes from creditors on your accounts.

It's a good idea to get these free reports each year to look over for possible mistakes. On your personal details, check for typos, wrong addresses, incorrect Social Security numbers, etc. On your credit details, review your financial data for such things as loans showing a balance due even though they've been paid off, any credit cards or accounts you have cancelled that aren't reflected as such, and any other inaccurate reporting. The more factual your reports are, the less questions a loan company will have to ask, so make sure you report all errors and have the mistakes fixed A.S.A.P.