How Credit Bureaus File Information

You may know how to read a credit report but you are surely interested on how information that makes up your report is collected

. After all, not knowing where this information comes from was the first inefficiency of such system in the 1830s when credit reporting just got started. All information that is placed on your report is collected by more than 1,000 local and regional credit bureaus or Credit Reporting Agencies (CRAs). This information comes or is collected from all your creditors.

Local and regional credit report companies, though large in number, are typically affiliated with one of the three major national credit bureaus which are Equifax, TransUnion and Experian. In the past, branches of national CRAs also collect information locally and report this information to the central CRA. This central CRA then puts together all the information gathered and sells them back to the branches for a fee. This fee comes from a percentage that branches pay to the central CRA.

This information that is bought by your creditors in the past can now be accessed for free today. You are entitled to a free annual credit report once in a year through the provisions of the Fair Credit Reporting Act (FCRA). So, how are all information woven to make your report? When you apply for a loan or a credit card, for example, you supply the company with personal information such as your name and address (previous and present), your employer, other accounts you have, etc. All the information you gave will be reviewed by the company.

The company you are applying a loan or credit card from will then contact a CRA and go through the information you supplied to check if everything is correct or accurate. Once your application gets approved, the information you have given is now forwarded to the CRA. Credit report companies will also receive reports of your payment history from your creditor. This will now become a part of your credit report and will make up 35% of the computation for your credit score.

Your annual credit report will also contain information accessed by the CRAs from public records such as court records. Every transaction you make with creditors and merchants are also reported monthly to CRAs. If the creditor is a big company, it will most likely report the information to all three major credit bureaus. If it is a small company, it will probably only report the information to one of the three major credit bureaus. This is why your credit report from one credit bureau to another may not be the same. Reviewing your credit report, therefore, can help you avoid inaccuracies that can affect your credit score.

by: Leo Chu

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