Custom report types versus standard report types
Key Takeaway
Choosing a report type is choosing what data a report can see. If no standard report type includes the objects, fields, or set of records you need, an admin builds a custom report type.
A report type works like a template for a report. It decides which records and fields the report can use, based on a primary object and any related objects. Salesforce provides standard report types for objects. Admins create custom report types when the standard ones don't include the objects, fields, or set of records a report needs.
What a report type is
Every report type has a primary object and can also include related objects. A report type defines the set of records and fields available to a report. That set depends on the relationships between the primary object and its related objects.
Choosing a report type means choosing what data the report can see, so it is the first decision when you build a report. In Salesforce Classic, you can't change a report's report type after you create the report, so pick the report type before you start building.