The Three Credit Scoring Bureaus
Credit reports are maintained by three national credit reporting agencies. The three agencies in the United States Equifax, Experian (formerly known as TRW), and Trans Union, maintain the credit history of each consumer. Innovis is a fourth credit rating agency; however they do not make decisions for denying credit to any consumer thus, it are still in a nascent stage.
About Credit Bureaus
Owned by shareholders, the national scoring bureaus are for-profit organizations. Although they are national agencies, they do not have direct contact with the government, nor do they receive funding from the government. Each of these three credit bureaus compete with each other and sell their credit reports to lenders for a fee.
How Do the Three Credit Scoring Agencies Work?
Credit bureau agencies work in the following ways:
- These bureaus speak to the creditors and lenders that have offered credit to the consumers. They solicit information regarding the experience they had with the consumers while dealing with them. They request the lender to join their systems and report their credit lending experience with the borrowers. The information shared includes the amount of credit extended, the monthly installments, whether the borrower has made timely payments or not, and so on.
- Creditors are allowed to use the credit agencies' systems to assess the credit report of any borrower in return for the information shared by them. Thus, the creditors have means of assessing the credibility of their existing accounts.
Regulatory Body for Credit Bureaus
All three credit score generating credit bureaus are governed by the Fair Credit Reporting Act (FCRA). The FCRA covers the credit bureaus and is the federal law that regulates the credit history of an individual. Different states have different versions of this law.
Credit Report Generated by Three Credit Bureaus
The credit report generated by credit bureaus can contain a lot of relevant information. You should check the information thoroughly to ensure that there is no incorrect information hidden in the report which might directly affect your scores. The report has a section on each of these:
- Consumer information section containing information on your name, address, employment and age.
- A short message reported by you, stating explanation for a late payment, if any.
- Your account and payment history, any inquiries generated by you, and public records of bankruptcy, associated with you, if any.