Understanding and appreciating credit reports and why they exist becomes necessary anytime one is going to apply for credit (and it’s a mandatory thing for almost everybody these days) and they want to make sure they’ll be successful in the application for it. A credit report can affect much more of a person’s life these days than just whether or not a credit card is issued, for a fact.

For example, having what is known as “poor credit” may cause a person to pay much more for not only the things that are financed but also things that are purchased or rented or leased on even an occasional basis. As an example, realize that there are a number of states that allow automobile insurance companies to pull credit as a means of determining how much to charge for a policy.

Why this is so is because insurance companies believe that credit worthiness can be a good indicator of whether or not a person is a good risk in terms of claims, accidents and other driving behaviors. Many experts say that that is nonsense but the fact is some companies do it, although the states have begun to catch on and have started outlawing the practice.

Another way in which credit reports are being used these days is by employers, who may pull a credit report from one of the three major credit reporting bureaus (Experian, EquiFax and TransUnion) and look it over before making a hiring decision. One thing to know is that a prospective employer must obtain permission from the prospective employee before doing so.

What all this means is that credit and the need to have it and also the need to assess just who is a good credit risk and who isn’t is a a fact of life in our society these days. Mailboxes can be stuffed full of credit offers from organizations that have accessed what the credit bureaus call a quick look report and sent out an offer for “possible” credit because of that quick look, for example.

A report of credit worthiness as issued by a credit bureau is also used in traditional ways such as determining whether or not a person should be given credit and how much the interest rate will be. These reports usually span 7 to 10 years in a person’s credit life and somebody who has a credit score below 600 or even 650 can end up paying much higher interest rates for most anything, including mortgages.

That’s why it’s important for a consumer to pull all of his credit reports from the three major bureaus at least once a year. By law, each bureau must provide one free report to each consumer when asked to do so. The report will not usually contain a credit score, which is normally an additional-cost feature, but it can be a way to see what each bureau has on a consumer, so keep that in mind.

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