Credit report agencies collect your credit history from credit card companies, banks and mortgage companies, as well as other creditors,
in order to compile an in-depth credit report.
The information contained in this report will also be used in calculating your 3-digit credit score.
If you have ever been the owner of credit cards or filed a loan application,
then you are certain to possess credit history.
Every credit card holder’s credit history is maintained and compiled by companies known as credit bureaus or agencies.
Also known as the “Big Three”, Experian, TransUnion and Equifax are the biggest credit reporting agencies in the United States.
While there are other credit bureaus, these 3 receive the most attention due to the fact that they maintain the largest nationwide databases
containing the credit information of consumers.
For instance, Experian maintains the credit information of 215 million consumers in America, which covers more than two-thirds
of the population in the United States.
The Big Three are charged with the responsibility of collecting and reporting credit card information.
Each month, lenders and other creditors will send the updated credit information of consumers to at least one of these credit bureaus.
This information consists of the amount owed by individual consumers and whether or not they make their payments in a timely manner.
Whenever the consumer fills out a credit card or loan application,
information such as their income is sent to the three credit bureaus.
In addition, these credit report agencies peruse public records for the financial information of consumers, which may include court records
for foreclosures and bankruptcies. (Read 'How to Get a Credit Card After Bankruptcy' here.)
Each time you make an application for credit, the credit card company or bank will contact one or more of the credit bureaus
for purposes of reviewing your credit score and report.
The lender will then make a decision on whether to approve your loan application and the applicable interest rate, which is largely
based on the credit bureau reported credit history.
Credit report agencies are powerful institutions whose actions could cripple a consumer’s borrowing capabilities for a long time.
This may be due to a single bad entry, debts wrongly listed as being delinquent, debts belonging to other persons with a similar name,
or closed accounts that are listed as being open.(Read 'How to Improve Your Credit Score' here.)
What’s more, your future employer, landlord and insurance company are likely to request for your credit report from the credit reporting agencies.It is therefore important to ensure that every detail on your credit report is accurate and true.
For decades before the implementation of the 1971 Fair Credit Reporting Act, the information that was collected by credit bureaus
was concealed from borrowers. Consumers were kept in the dark with regards to the reasons why their application for credit was denied,
and whether or not there were mistakes in their reports.
Recent legislation now also provides American citizens with access to their
own credit scores and credit reports for free,
as maintained by these three nationwide credit bureaus: Experian, Equifax and TransUnion.
What this means is that Americans now have the right to be informed of the exact reasons why they were denied credit by a lending institution.