Your credit report is a reflection of how you handle your financial responsibilities. There are LOTS of credit reporting agencies located all over the United States. But the most well known, and most used are Experian, Equifax and Trans Union.
Whenever you apply for a loan, credit card, insurance or even a job. You can expect a credit check. One of these 3 bureaus (and sometimes all 3 of them in the case of mortgages) will be contacted by your potential creditor.
What are the responsibilities of the credit bureaus?
The three credit reporting agencies – Equifax, Experian and TransUnion, are the responsible offices that collect and handle the credit records of consumers. They received the special designation from the Federal Government to compile credit information of individuals and issue credit reports to authorized parties, like financial institutions.
The three credit bureaus perform the following important functions:
- Collection and Updating of Credit Information – Credit bureaus gather information regarding personal and credit activities.
Some of the common details that these reporting agencies acquire and record include
- identification details and employment background of the individual,
- his/her payment records and history,
- inquiries made on the person’s credit records, as well as public record information.
- update consumers information when ever a change is noted. They perform this important function especially when an individual transfers from one job or residence to another, pays off or opens a new credit account, files for bankruptcy and performs other credit-related activities.
- Generation/Computation of Credit Scores – Credit bureaus use custom software which computes the credit rating of a consumer. This score varies from credit reporting agency to credit reporting agency. That is why its very important to pull all 3 credit reports to see what your score is.
- Provide credit information to Financial Institutions – The three credit reporting agencies also provide credit information to authorized parties. They provide details to lending firms and banks that needs to evaluate the credit worthiness of their applicants. Through the inquiries lenders can acquire sufficient credit details about their potential borrowers. With the use of the credit details they have acquired, creditors can come up with the interest rate, payment arrangements and fees they will charge on the loans they will provide.
- Responding to Disputes from Consumers – The Federal Law also requires the credit bureaus to respond to disputes filed by consumers. Upon receiving a complaint or dispute, the bureau must immediately conduct an investigation in order to make the necessary updates on the consumer’s credit file.
Yes, credit bureaus handle critical information that can allow us, or prevent us from receiving the credit lines we need. But that’s not all. Credit bureaus also help us find ways by which we can improve our credit rating.
Through the credit reports and scores they provide, you can evaluate if you need to take the time to clean up your credit and if your credit is being reported accurately. Be on the look out for missing credit accounts. Don’t just look for the bad marks. Is your car loan being reported to all 3 credit bureaus? Did you pay off your student loan and its still showing open? These are the things you should also be monitoring and if they are not showing, contact the credit bureau with proof of the payoff or that the account exist and ask for it to be reported.
About the Author:
Suzy Vanstrusen is a credit analyst and a writer on the website EZCreditRepairSolutions.com. She has been providing consumers with tips and wise information about credit repair as well as helping you out more with your bad credit loans. Copyright © 2010 – 2014 (updated)