Final answer:
Credit reports are typically requested by banks and lenders when an individual applies for a loan to assess creditworthiness, including past borrowing behavior, income sources, and potential cosigners or collateral.
Step-by-step explanation:
A credit report may be requested under several circumstances, particularly in the financial capital market. When an individual applies for a loan, banks and lenders typically require the borrower to provide information about their income sources and undergo a credit check to assess past borrowing behavior. This process helps lenders decide if the borrower is creditworthy.
In addition to credit checks, other measures such as requiring a cosigner or providing collateral may be employed. A cosigner is someone who legally pledges to repay the loan if the original borrower fails to do so, while collateral includes property or equipment that the lender can seize if the loan is not repaid. It is important to only share the minimum information requested and to understand how personal information will be used and who will have access to it. Monitoring your credit history is crucial for detecting signs of potential identity theft.