Credit Reporting Agencies Continued…

How do they work?

So how do credit reporting agencies get all this information about your credit? Many times, they go straight to the source – talking to credit card companies, banks, and other organizations. These companies then share information about their customers to the agencies, which allows them to make a credit report on you.

The three credit reporting agencies do not work in tandem – in fact, they are directly competing with each other. This necessitates getting a credit report from all three agencies if you want a comprehensive view of your credit.

What is on a credit report?

The information that agencies provide on the credit reports is extensive. Your name, social security number, address, birth date, open accounts, accounts turned over for collection, tax liens, bankruptcies, and countless other pieces of information are provided on this report.

You are also assigned a credit score. There is a specific formula that goes into making the score, but it's an understandably complex process.

How can you get a credit report?

You get your reports directly from the credit report agencies. In some states you can request at one report a year for free, while other states have various fees associated with the reports. After being denied credit, you are able to receive a free report to determine why you were turned down.

Some items on the report may be inaccurate or outdated. Inaccurate information can be fixed by talking directly to the credit report agency. Outdated information is a bit of a problem, however. Creditors are not required to make updates to your reports, and as such you might not have certain items show up that would help improve your credit rating.

Typically, negative information is listed on your credit report for seven years. A few special cases exist: bankruptcy is shown on the report for ten, life insurance over fifty thousand dollars stays on indefinitely.

Credit report agencies help you out by providing these reports, and letting you know where your credit trouble areas may be. It would be a good idea to get a report at least once a year, and make sure nothing negative has shown up.

By Tiffany Garden