New Study Reveals the Most Important Item in Your Credit Report

Credit ReportA person's credit card usage is the single most important factor in establishing their credit, according to a new study released Thursday from the Consumer Financial Protection Bureau.
The study analyzed data from the largest reporting agencies and found that "credit card history dominates the information in credit reports."

The reporting agencies -- Equifax (EFX), Experian, and TransUnion -- each have more than 200 million files on customers, which are updated monthly. More than half of the updates come from credit card companies, with 40 percent of the information on credit furnished to the reporting agencies coming from bank, or general use, credit cards, and 18 percent from retail, or specialty store, credit cards. Mortgages and auto loans play a significantly smaller role, 7 percent and 4 percent, respectively.

Most of the information supplied to the credit reporting agencies (also called bureaus) is done by a handful of the largest banks and other financial institutions.

Have You Looked at Your Report Lately?

Credit reports -- and the credit score derived from the information in those reports -- are a critical part of consumers' financial lives, whether they're hoping to purchase a car, obtain a car loan, or even get approved for a cellphone plan. A person's creditworthiness determines how much credit they'll be granted, and at what interest rates.

However, the study found that fewer than 1 in 5 people obtain either free or paid copies of their credit report.

Under the Fair Credit Reporting Act, consumers have free access to their credit reports from the major bureaus through Also, people who are turned down for credit based on their credit reports, or those who have been victims of identity theft, are automatically entitled to a free copy of their credit report.

Frequent monitoring of credit reports can uncover errors that may be affecting your creditworthiness, as well as spot credit or identity theft fraud. Those who notice errors that possibly affect their credit rating can dispute them with the credit bureaus, or directly with the original bank, mortgage provider, or other lender that sent the agency the information.

The study found that nearly 32 million to 38 million disputes were filed in 2011, with nearly 40 percent of those disputes relating to debt collections. Most of the disputes filed with the credit reporting agencies are passed back to the original lender for resolution.

Consumers worried about potential identity theft can opt to freeze their credit reports, which will block new credit inquiries, by the consumer or anyone else, until the freeze is temporarily or permanently lifted. A credit freeze won't interrupt the regular use of banking accounts or credit cards. Laws governing credit report freezing are managed at the state level, and fees, often nominal, vary by state.

Motley Fool contributor Molly McCluskey writes about personal finance, investing and budget travel.

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I agree that the " credit agencies " are nothing more than a bogus ploy, people being judged by a credit report. Credit has nothing to do with a persons character as they use it to be, just like your Soc.Sec. # was never intended to be used as a form of ID !
Why is a Mortgage, which is supposed to be your LARGEST/ LONGEST line of credit is rated as the smallest, 7%, while credit cards are at 40%.
Just shows how screwed up the system is.
Get a 30 yr home loan, the biggest loan you take of your life, never miss a payment / etc. / etc.,...and its the least used for determining whether you are " worthy " for everything else.
Horse hockey,..we need to change the credit system,..we all know its broke,..thats why the Great Depression of `08 happened.
Have a nice day

December 19 2012 at 12:56 AM Report abuse -1 rate up rate down Reply
Jim Craigs


December 18 2012 at 8:35 PM Report abuse +1 rate up rate down Reply

We do not live in a credit driven society - we live in a consumer-dysfunctional society. Being more willing to pay a bank interest just to buy material goods today has led to millions being illiquid and bankrupt - all for the short term fix of consumerism.

December 18 2012 at 7:00 PM Report abuse +1 rate up rate down Reply

Credit cards are how the banking industry treats you like a drug addict.

They lure you in, and then they trap you. Be carfeful 0 the reproting agencies are manipulated by the banks and do not portray real credit worthiness. In fact, the banks that were the least credit worthy were the ones that received the most favored interest rates.

The system for accessing credit it skewed to Investment Banks - the ones that created the depression.

December 18 2012 at 6:59 PM Report abuse +1 rate up rate down Reply

Had a mafor department store that sold their credit card accounts to GE. I had a substantial line of credit with them for over 25 years, never missed a payment. The last few years I have not used their card even though I shop there, at my age don't buy unless I have money,,, so GE lowered my credit limit by 75%, I do need the line of credit, but had the same limit for over 20 years. It cut my credit score,,, I don't need credit But I will never shop at Dillards again and am checking all my other cards to see if GE owns the card,,, going to cancel all of them...Be careful use your cards whether you need them or not,,, or they can hurt your credit score....

December 18 2012 at 5:41 PM Report abuse +1 rate up rate down Reply

The only thing that "should" factor into your credit score is the degree to which you have upheld your end of your credit agreements. Inclusion of anything else means you are being manipulated for someone else's gain.

December 18 2012 at 5:30 PM Report abuse +2 rate up rate down Reply

As tjdwill007 stated, your credit score affects you in many different ways. In many states, a prospective employer can use information on a credit report (that can only be pulled with your consent) to deny you a job:

In addition to disputing accurate information, consumers should understand what factors effect their credit scores and what steps they can take to improve their scores.

December 18 2012 at 1:18 PM Report abuse rate up rate down Reply

If all of us had our credit cards taken away from us tomorrow and we had to pay for everything in cash our country would fold like a house of cards. Period. END OF CONVERSATION.

December 18 2012 at 12:55 AM Report abuse +1 rate up rate down Reply