Law does not force creditors or lenders to submit anything to credit bureaus. 1 Many firms, on the other hand, opt to record on-time payments, late payments, purchases, loan conditions, credit limitations, and sums outstanding. Credit bureaus gather this information, which is used to generate a person’s credit report, and it is often used to affect credit ratings. 2
Significant occurrences, like as account closures or charge-offs, are also often reported by businesses. If a mortgage is paid off, for example, this information is disclosed. 3
Governmental agencies that keep public records do not report to credit bureaus, but the bureaus normally get the materials on their own. As a result, bankruptcy filings often appear on credit records. 4 5
Another example: if a person owes money to the IRS, a public record of a tax lien may go up on their credit report, affecting their credit score.
- Lenders and creditors, corporations, and government entities provide information to credit bureaus.
- Experian, TransUnion, and Equifax are the three major credit bureaus. 2
- Credit reports and credit ratings reveal how a person manages debt and credit.
- Disputes may be lodged against inaccurate information on credit reports. 6
Creditors and Credit Bureaus
Banks and credit card firms, for example, must pay to submit information to any of the three main credit-reporting agencies, Experian, Equifax, and TransUnion. Because of the costs involved, some creditors and lenders may choose to utilize just one service rather than all three.
Even a respectable borrower’s credit score might suffer as a result of this activity since it only alerts one credit agency. Why? Because not all bureaus obtain the same favorable payment history information from the customer.
When a person pays off a long-term loan, such as a mortgage, the information must reach credit bureaus in order for the debt to be erased off the person’s credit history and report.
When do creditors report to credit bureaus? It depends. Some creditors report to the bureaus on a monthly basis, however various companies submit on different days, which means that an individual’s credit report is regularly updated. Some lenders and creditors send information on a quarterly basis, too. 7
Negative Hits on Credit Reports
Negative information, such as late or missing payments, stays on an individual’s credit report for seven years before being automatically removed by the credit agencies. 8
Debtors who discover wrong information on their credit reports may submit a dispute with the credit agency or the creditor that supplied the incorrect information. Most allegations must be examined within 30 days, and if the claim is verified, the negative report must be removed by all three agencies. 9
The Bottom Line
Credit bureaus receive credit information from creditors and lenders, both good and negative, that may assist or harm a person’s financial future. Debtors should carefully review their credit reports to see what information is shared with the credit agencies.
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