A more thorough explanation:

A credit report is a document that provides a detailed summary of a person's credit history. It includes information about their loans, credit cards, bills, accounts, payments, bankruptcies, and credit searches. Credit reports are prepared by credit bureaus using financial information collected from creditors.

Lenders use credit reports to determine a person's creditworthiness when they apply for a loan. For example, if someone has a history of paying their bills on time and has a good credit score, they are more likely to be approved for a loan. On the other hand, if someone has a history of missed payments or defaults, they may be denied a loan or offered a higher interest rate.

Under the Fair Credit Reporting Act, consumers are entitled to a free credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) once a year. This allows people to review their credit history and make sure there are no errors or fraudulent activity.

For example, if someone notices a loan on their credit report that they did not apply for, it could be a sign of identity theft. They can then take steps to report the fraud and protect their credit.