Credit Reporting Agencies

Which are the Credit Reporting Agencies?

A Credit Reporting Agency is a company that provides credit information on individual borrowers. This helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate applied to loans. It is also known as a credit bureau (U.S.) or credit reference agency (UK).

These agencies regularly track a consumer or business' credit history. It is provided to them by creditors and includes detailed records of the relationship a person or business has with the lender. Detailed account information, including payment history, credit limits, high and low balances, and any actions taken to recover overdue debts, are all reported regularly. Based on this data, the rating agencies offer credit scoring for each individual or business. The higher the score, the better is the credit history and the higher the probability that the loan will be repaid on time. Lenders look at this score to assess the prospective borrowers. Given the mechanical nature of this calculation, an individual's credit score is highly dependent on the information input into the algorithm. If a credit bureau has collected inaccurate or misleading data, an individual's credit score could be adversely affected as a result. Consumer welfare advocates advise individuals to review their credit reports at least once a year in order to ensure that the reports are accurate.

Credit bureaus can provide information only to the following: 
• creditors who are considering granting or have granted you credit
• employers considering you for employment, promotion, reassignment, or retention
• insurers considering you for an insurance policy or reviewing an existing policy
• government agencies reviewing your financial status or government benefits
• anyone else with a legitimate business need for the information, such as a potential landlord
• court orders or federal jury subpoenas 
• third party if you request this in writing

Credit reporting Agencies have certain responsibilities to the consumer which include the following:
• Provide a consumer with information about him or her in the agency's files and to take steps to verify the accuracy of information disputed by a consumer. Consumers are entitled to receive one free credit report a year. 
• Conduct reasonable investigations into consumer disputes about incorrect information on their credit reports. 

Credit reporting agencies may not retain negative information for an excessive period of time. Typically, all your credit history information remains on your report for seven years. The exceptions are bankruptcies which will remain on your credit report for10 years and tax liens for 7 years from the time they are paid. 

The three big CRAs are Experian, Equifax, and Trans Union. All three of them maintain national databases credit histories of individuals and businesses. Most credit grantors report to one or more of them. The 3 national credit bureaus are competitors of each other and do not normally share their credit information except in special cases. It is important to order a credit report from all three credit bureaus to accurately know of your credit rating. These organizations are for-profit entities and possess no governmental affiliation. Aside from these three big companies, there are also other local credit reporting agencies and reporting agencies.