Credit reporting bureaus are essential to lenders. The reports that the provide to a lender will largely determine whether you get the load you are applying for or not. That’s why it’s essential for you to keep up with the ever changing information contained in your credit file. Your credit report also has major implications for those attempting to get out of credit card debt today.Here’s how the whole process works:

Everyone in the U.S. who has ever applied and been approved for a loan has a credit report or rating. Your credit rating is a written record of the loans you have received and your repayment history. If you have been late with payments, if you have missed payments, if you have defaulted - all of these acts will show up on your report.

But that’s not all. Any time that you fill in a loan application and the potential lender sends inquires of your credit worthiness to any of the credit reporting agencies, it will be recorded as an “inquiry” in their report. What you’ll find here is the request date and name of Anyone, in the last couple of years, who has requested to see a copy of your credit report. In addition, the credit inquiry box may show the names of creditors who you have not even requested credit from. For example, credit card companies may have checked your credit scores to determine if you are a prospect for one of their many credit card promotions.

You may be shocked to discover just how intrusive your credit report actually is. It will contain all kinds of extremely personal facts about you. Facts such as your social security number, birth day, a list of current and former employers, current and former home addresses, and so on. If you have outstanding loans, the report will also list information such as the date the loan was applied for, type of the loan, amount of the loan, history of repayment, and whether the account is still open.

If you have any loans that have been turned over to a collection agency, those loans will also be listed. If you have had any court judgments against you or property liens outstanding, those will be listed as well.

For a creditor to have access to this information, the creditor must subscribe to one or more of the credit bureaus. There are three major reporting agencies that lenders contact for credit information - Equifax, Experian, and Trans Union. The relationship is a two way street. These agencies provide credit worthiness information to the various lenders. The lenders, in return, provide updated customer transactional information back to the credit bureaus. So, every time you make a payment on time, or alternatively miss a payment, the lender will transmit that information to the credit bureaus.

Using the information contained in your file, the credit agency will rate you and assign a score to you indicating your credit worthiness. To various degrees, most lenders will base all or part of their decision to approve the loan based on this score.

However, as many people have found out to their chagrin, the information that the credit agencies keep is not always correct.  For example, if, for some reason, the creditor makes a mistake in the information that they transmit to the credit bureau, your record will have incorrect information. This is how millions of pieces of false information ends up in credit databases and the most important reason why everyone should request a copy of their credit report from each agency at least once a year.

Bookmark It