Credit report is a result of a background check performed in order to asses an individuals financial responsibility. It's based on many factors and the exact formula of calculation is not disclosed to avoid people trying to cheat the system. It has become very commonplace recently, it's fairly safe to assume that you may have even been subjected to a credit check without knowing it ( even though it's theoretically not legal to do without your consent ). You're having a credit check run whenever applying for a contract phone, renting a new flat of even signing up for electricity supply.
To be honest, however, it's hard to blame lenders for taking precautions. If you were to lend money to a stranger you'd definitely insist on learning that persons financial background. This way you'd get an idea of how likely are you to get the money back.
Fast and accurate but anonymous
What appear to be the biggest advantages for lenders speed, low cost and a fair accuracy does produce a certain disadvantage for the actual customers. Credit check is designed for a statistical person and you can not directly dispute the results. It doesn't matter if you've spent a week in hospital and simply could not make a mortgage payment on time credit score will suffer this way or another. If you wish to be considered a trustworthy person for the banks you simply need to play by the rules in place.
What can you do?
Play by the rules. First of all, you should take advantage of the free credit check facilities and monitor your score often. It only takes a couple of minuted to discover the shortcomings on your report. Once you know what's wrong it will be a whole lot easier to repair the damage and start improving credit capability.
Keep up with your payments as this appears to be very important factor. If you can't avoid late payment call the company and try to work it out. In most cases your payment can be deferred to avoid credit check penalty.
Don't get paranoid thinking What is my credit score' but keep in mind that good credit report will make you life a whole lot easier and allow you to make purchases you may have otherwise not been able to afford.