The credit reporting agencies – TransUnion, Equifax and Experian
(formerly TRW) are the three national credit reporting bureaus that
keep records on consumers (they are also called the "Big Three"). They are by no means the only ones but they are the biggest. The reporting agencies work with lenders, creditors, insurers and employers to update and distribute your information to the appropriate institutions. According to the Consumer Data Industry Association, an international trade organization that represents CRA's, there are dozens of smaller, regional and industry-specific credit bureaus that provide clients with
credit reports and other "risk-management" service. There are also many international credit bureaus that focus on one country or region.
Credit reporting agencies are powerful institutions but are nonetheless very important players in the financial health of a country. Large lending institutions like banks, mortgage companies and other creditors take risks when they give loans to consumers for buying homes, cars, personal loans, paying for a college education, etcetera.
Creditors attempt to minimize the risk of these loans by carefully examining the credit history of borrowers. If a borrower has a bad credit history, then the lender might not
give him a loan, or may charge him a higher interest rate.
If you've ever owned a credit card or applied for a loan, then you have a credit history. Credit reporting agencies compile and maintain your credit history. They collect your credit history
from credit card companies, banks, mortgage companies and other creditors to create an in-depth credit report. The information in that report is also used to calculate a three-digit credit score called a FICO score (but it can also be another less-common scoring model).
Here's how The Big Three collect credit information:
Every month, lending institutions and other creditors send updated consumer credit information to one or more of the credit reporting agencies. This information includes how much individual consumers owe and whether they make their payments on time.
Whenever you fill out an application for a credit card or a loan, all of the information contained in that application is also sent to the credit reporting bureaus.
The Big Three also scour public records for financial information, such as court records from bankruptcies, liens, suits, foreclosures, etc.
Credit reports are a gold mine of information about consumers. They contain Social Security number, date of birth, current and previous addresses, telephone number (including unlisted numbers), credit payment status, employment, even legal information. Companies make a lot of money off your credit reports that sometimes they overstep their limit into gray areas that are rife for lawsuit. Recently, a class-action lawsuit prevailed against one of the credit reporting bureaus, TransUnion. The said credit reporting agency settled with a group of plaintiffs, with the final settlement set to be approved on September 2008. It was a victory for consumers against one of the major credit reporting agencies. For more information about this important victory, go to this page to learn about a free credit check and free credit score that comes with it from TransUnion.
Your credit report is divided into six main sections: consumer information (address, birthday and employment), consumer statement, account histories, public records, inquiries and creditor contacts. When you open a new account, miss a payment or move, these sections are updated with new information. Old negative records will stay on your credit report for 7-10 years. Positive records can remain on your credit report longer. Not all creditors report to all three credit reporting agencies and the agencies obtain their data independently so your reports from TransUnion, Equifax and Experian could be substantially different from each other.
Anyone with a "legitimate business need" can gain access to your credit history, including:
Those considering granting you credit.
Employers and potential employers (but only with your consent).
Companies with which you have a credit account for account monitoring purposes.
Those considering your application for a government license or benefit if the agency is required to consider your financial status.
A state or local child support enforcement agency.
Any government agency (limited usually to your name, address, former addresses, current and former employers).
The same lending institutions that supply information to credit reporting
agencies also request reports when a consumer applies for credit. Individual consumers can request copies of their credit reports and credit scores
, as well. Credit reporting agencies only share credit reports and scores when there's a request, also called an inquiry.
Thanks to the federal FACT Act, consumers nationwide are now able to get a free annual credit report from each of the three credit bureaus - Equifax, Experian, and TransUnion. To order your free reports, you can call the official toll-free number, (877) 322-8228. You can also go online to www.annualcreditreport.com where you can order your reports directly. Or you can print out the form and mail your request request.
Be warned though that with this free credit report, you cannot get your credit score. The credit reporting agencies charge for that important credit score.
Equifax, Inc. P.O. Box 740241
Atlanta, GA 30374