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Not only can your credit history be found in your report, but it also contains personal information that should remain confidential, like your SSN, full name, current address and tenure, and past addresses. 

 A credit report's main purpose is to list all of the financial activity for any one person, encompassing all or most of their lives.  Any financial relationships, be it a credit card, mortgage on a house, HELOC, student loans, and car notes.  It may even list any layaway accounts that are open.

For each of the credit accounts, the credit report also details information about outstanding balances and the high-water marks of previous balances.  Payment history, which may be the most telling piece of information, is also provided to those organizations that are receiving this report.  Those with exemplary credit payment history will be acknowledged in the report, as well as any blemishes like late payments and the circumstances pertaining to late payments.  If the credit account is either current or behind schedule, the credit report will reflect its current status.

In the event a particular account was so delinquent that the lender "charged off" the debt, or forgave the delinquency and sold it to a collections agency, then it will negatively show up on your credit report.  Tax liens will also appear, along with court judgments and unpaid child support.

The implications of these negative reportings can last for up to 10 years!  Lesser offenses, like late payments, will generally appear for up to two years, but you should not take these seemingly minor spots lightly.  No matter how major or minor, any sort of delay in payment or delinquency will be detrimental to your score.

In addition to the positive and negative remarks on credit scores, the overall score is affected by the number of "inquiries" on various accounts.  For every time that you apply for a credit card or loan, the lender must verify that you are in good financial standing, and adjust his credit offering accordingly.  If these inquiries are numerous, it can appear as a negative indicator, pointing to repeated attempts at being issued credit in a short amount of time.

Mortgage lenders will almost exclusively refer to FICO scores, or Fair Isaac FICO scale.  It's a scale from 300 to 850, with the best scores in the higher region.  Each aspect of your credit activity and history is assigned a weighted value in percentage, and each piece of information is then combined to give the FICO score.

On this scale of weighted values, your payment history accounts for 35 of the FICO score.  Because it makes up such a big part of the overall score, even one or two late payments can lower it.  Outstanding balances comprise another 30 percent of the score, which is negatively affected when you max out your charge cards.

Two components of the FICO score are minor, but can be easily adjusted to maximize your score.  First, your management of credit, meaning your overall activity and the purchasing/repayment habits, comprise 10 percent of the score, while the diversity of your credit accounts make up the other 10 percent.  By diversity, we refer to the various forms in which capital is loaned, including mortgage/car loans, credit cards, and short-term loans.  The more diverse the credit types, the better for your score.  However, this is not a good justification to open more credit accounts and increase your outstanding debt.  If it is possible to have credit available and not use any of it, then that can be beneficial to your score.

The last component of your FICO score is the length of time that your credit accounts have been open.  This can create confusion for consumers that are considering closing an account or two.  Those accounts that have remained open the longest AND are good proof of your best credit habits should remain open.  If you must close an account, close those that were opened most recently and might adversely affect your FICO score. 

As a case study, a person might have owned two separate credit cards, one for 18 years and the other for 21 years.  There is no outstanding balance that lasts longer than a month by sending full payments each month.  No annual fees or membership fees apply for these accounts, so owning the cards is a much wiser choice over some that do charge the consumer. 

This particular consumer has a very good credit score, above 750.  Should they decide to close one of their accounts, or even one, their overall FICO score would suffer because of it.  The rationale behind this lies in the history that these accounts represent in their credit.  Over 21 years, this consumer proved that they are credit worthy and pose little risk to the lender. 

When accounts are closed, the computations do not account for circumstances that take place in our everyday lives.  Rather, they only see the raw data change, in this case, the closing of a credit account.  While there is no indication that the closing of the account was for non-payment, the computations only sense a lessening of available credit, whereas before the accounts were closed, this particular consumer had a sizable amount of credit available to them regardless of whether they used it. 

Due to the fact that your FICO score is based on how well you manage your available credit, this is why it can be a bad idea to close an account that has been open from an extended period of time, ranging from five to ten years.

As mentioned earlier, a better option would be to close a recently-opened account, one that has been open anywhere from a year to two.  Closing these new accounts will have minimal effect.

While closing a new account may not hurt your score, you might consider keeping it open if it doesn't charge annual fees.  As emphasized previously, the total amount in dollars of credit that is available to you in the form of credit cards, loans, etc. play in your favor.  Maintaining accounts open is advisable, given that you are not using them or paying them off right away.  Having a wallet full of credit cards with no outstanding balances is good.  Just be careful not to lose your wallet. 

This may go without saying, but it would be a big mistake, and not an uncommon one, when someone closes an account that still has an outstanding balance.  Doing so will drastically lower your FICO score, much more so than keeping the account open and working towards paying it off.