What is a credit report?

First of all what is a credit report? A credit report, according to the wikipedia, summarizes historical financial information collected to determine an individual's or an entity's credit worthiness. Credit worthiness may be defined as a potential to pay off a debt. So in general if you had a loan or a debt and paid it off on time without any delays your credit report will be good. But if you delayed payments on your debt your credit worthiness is low and as a result your credit report will not be as good.

You might have noticed that if you go buy a car, a house, a new credit card they pull out your credit report to judge if you will be able to pay them off if they loan you something. If you have a good credit report they will be more than glad to sell you the product and give you a good interest rate. Whereas if you had delayed on some payments they might be a little iffy and will want a security and/or give you a higher interest rate.