Credit Reporting Agency

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Credit Reporting Agency

What Is a Credit Reporting Agency?

A credit reporting agency is a company that keeps track of people’s and companies’ credit histories. They get information from lenders and other sources, which are then put into a credit report, which includes a credit score when given. They are also known as credit reporting agencies.

Key Takeaways

  • A credit reporting organization keeps track of people’ and companies’ credit history.
  • Experian, TransUnion, and Equifax are the most well-known credit reporting companies in the United States.
  • A credit reporting agency is sometimes known as a credit reporting bureau.
  • Financial institutions often collaborate with credit reporting organizations such as Equifax and others to give target marketing lists of prospective clients as well as soft inquires for credit card or personal loan prequalification approvals.

Understanding Credit Reporting Agencies

In the credit market, credit reporting companies fulfill a variety of functions. They keep credit information, compute credit scores, give credit reports, and advertise with credit providers.

Credit reporting organizations get several forms of information that might be incorporated in their client offers. Credit reporting organizations are often classified as either reporting on people or reporting on corporations. Experian, Equifax, and TransUnion are the three major consumer credit reporting organizations. Experian, like Dun & Bradstreet, provides business reporting.

A credit report contains a wealth of information and data that credit agencies may access. The three main credit reporting agencies in the United States are Experian, Equifax, and TransUnion. They are well-known for obtaining standard credit information and producing detailed credit reports on a borrower’s basic credit history. They establish industry standards for reporting and grading methods.

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Aside from the major three, there are several additional credit reporting companies. Lenders collaborate with credit reporting companies to acquire customized reports that include precise information that determines a lending decision. Credit reporting bureaus may collaborate with a broad variety of businesses to get various forms of credit data for their clients.

Credit Data

Many credit reporting organizations collect public records and supplementary payment data on mobile phone bills, electricity bills, and rent payments in addition to basic credit account information. Several new credit reporting firms are generating credit reports for thin-file borrowers based on alternative data rather than only credit accounts in order to give broader access to the underbanked population.

Credit Reports vs. Credit Scores

Credit reports adhere to a standard structure that contains a trade line for each credit account opened by a borrower. Trade lines display the amount of credit extended, the borrower’s monthly payments, and any past-due payments. After two consecutive missed payments, delinquent payments are reported to a credit agency. As a result, a trade line’s overdue credit history will normally begin with a 60-day past-due report, followed by 90-day, 120-day, and so on. Charge-offs on trade lines are also shown if a borrower fails.

A broad variety of accounts may have trade lines recorded. Credit accounts are often included, but itemized events such as mobile phone bills, utility payments, tax debt, or bankruptcy may also be included. Many credit reporting companies additionally put ad hoc things that are not part of a trade line together to give complete miscellaneous information.

The majority of negative things on a credit report will be there for seven years. Other things, such as bankruptcies, are covered for a period of ten years.

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The Fair Credit Reporting Act (FCRA) governs all credit reporting agency operations and is enforced by the Federal Trade Commission and the Consumer Financial Protection Bureau.

Special Considerations

Credit reporting organizations work with a variety of financial institutions, including credit card firms, banks, and credit unions. Through hard inquiries, financial institutions collect credit reports on people and corporations, which contain a credit score and specific information on individual trade line accounts. Financial institutions collaborate with credit bureaus to supply target marketing lists and soft inquires for prequalification approvals.

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