What is the purpose of a credit report?

The purpose of a credit report primarily centers around evaluating an individual's creditworthiness based on their credit history. A credit report contains detailed information about a person's borrowing and repayment activities, including credit accounts, payment history, outstanding debts, and any public records like bankruptcies or liens. This information helps lenders determine the risk involved in lending money or extending credit to that person. The better one's credit history, reflected in a credit report, the more likely they are to receive favorable terms on loans, credit cards, and other financial products.

Tracking savings account balances, assessing employment status, and showing income tax returns are functions that do not relate to the role a credit report plays in providing insights into financial behavior and trustworthiness from a lender's perspective.