Credit bureaus, also known as credit reporting agencies, report your credit history, including all your negative information, to creditors or lenders. These reporting companies collect and store your credit history and sell the information to financial institutions that are interested in knowing your credit worthiness.
Throughout the United States there are local and regional credit reporting agencies. Most of them have any association with the nation’s three major credit report bureaus: Equifax, TransUnion and Experian. These agencies generate credit reports to make credit buying faster, easier and safer for you.
How Credit Reporting Agencies Work
Credit report bureaus collect your credit history from credit card firms, mortgage companies and other creditors, which may contain factual information on how you pay their bills. The reporting agencies assemble the reported facts along with related public record to create your credit report. They also use the information on your credit report to calculate your credit score.
Every time you apply for a loan your lender examines your credit history first before extending you a loan. The lending company will contact at least one of the credit reporting agencies to view your credit report and score. If you have bad credit history they might not give you a loan, or charge you a higher interest rate.
So, credit report agencies merely compile your credit information and report it to creditors. They don’t rate your credit and don’t decide whether you can get new credit.
Free Credit Reports from Three Credit Bureaus
By law, you’re entitled to a free copy of your credit report from the three credit bureaus each year. The best time to get a credit report is long before you apply for any loan. By obtaining your free credit reports you’ll be able to spot negative marks as early as possible — especially for any wrong reporting.
If you find information on your credit report with which you disagree, you can dispute it. You are allowed to send a written request for an investigation to the reporting agency, and if the bureau finds that the information is incorrect, it will remove the item from your report.
You can also get a credit report some times after you make a big credit transaction. By periodically getting your credit report you can protect your credit rating from decreasing long before you commit an important credit purchase.