What is a credit reporting agency?

Definition and Examples of Credit Reporting Agency

How a Credit Reporting Agency Works

Types of Credit Reporting Agencies

Definition and Examples of Credit Reporting Agency

A credit reporting agency, also known as a credit bureau, is a company that collects information about the credit and financial history of consumers or businesses. The information contained in a credit report is used to create that person’s credit score. Alternate name: Credit Bureau

Banks and lenders look at the credit report and credit score of a consumer or business to determine creditworthiness. When you apply for a loan, the information in your credit report determines whether you qualify for approval and what interest rates you will receive.

There are three major credit reporting agencies in the United States that track consumer credit: Equifax, Experian, and TransUnion.

How a Credit Reporting Agency Works

If you have recently taken out a loan or applied for a credit card, your lending information has likely been reported to at least one of the major credit bureaus. These credit bureaus receive information from other companies, often referred to as data providers.

Data providers send information about the status of their customers’ accounts. This information includes things such as your current balance and whether you are paying your bills on time. There are no requirements for these companies to provide this information to the credit bureaus, but they do so voluntarily.

Credit bureaus also examine public records for things such as utility payments and bankruptcy records. However, credit reporting agencies do not include data about your income, race, religion, or political preferences.

Since your credit report plays a significant role in lending decisions, you have the right to ensure that the information in your credit reports is accurate. The Fair and Accurate Transactions Act (FATA) gives consumers the right to request a free copy of their credit report every 12 months.

Note: You can visit AnnualCreditReport.com to get a free copy of your credit report from each of the three major credit bureaus. You should check all three credit reports to ensure the information listed is accurate and to look for signs of identity theft.

Types of Credit Reporting Agencies

Equifax, Experian, and TransUnion are the three main consumer credit bureaus in the United States. Private lenders will report your payment information to at least one of these companies. Additionally, Equifax, Experian, and Dun & Bradstreet report on business credit.

Equifax

Equifax is a global data, analytics, and technology company operating in 24 different countries. The company tracks both consumer and business credit reports and offers credit monitoring and identity theft protection services.

In 2017, Equifax suffered a data breach that exposed personal information of 147 million people. The company agreed to a settlement of $425 million with the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), and 50 states and territories in the U.S. This amount is aimed at helping individuals affected by the data breach.

Note: If you were affected by the Equifax data breach, you can still file a claim until January 22, 2024.

Experian

Experian has been around for over 125 years and employs 17,800 people in 44 different countries. The company also tracks consumer and business credit reports and offers credit monitoring services to customers.

If you subscribe to a credit monitoring service, you can choose either a free or paid version. The premium version costs $24.99 per month and provides comprehensive credit and identity theft protection.

TransUnion

TransUnion was established in 1968 as a holding company for a railroad leasing operation. In 1969, the company expanded into credit monitoring, and by 1988, it achieved full coverage across the United States. Unlike other credit bureaus, TransUnion does not track business credit scores.

In addition

Additionally, the company offers its credit monitoring service to consumers. For $24.99 a month, you will receive daily updates on your credit score, email alerts about suspicious activity on your accounts, and identity theft insurance of up to a million dollars.

Dun & Bradstreet

Dun & Bradstreet is the only one among credit bureaus that focuses exclusively on business credit. Dun & Bradstreet provides reports on how businesses interact with their suppliers and vendors, making it a popular choice for companies looking to issue business credit. The company also uses industry data and public records to generate business credit scores.

Takeaway

A credit reporting agency collects information about consumers’ credit and financing history. The information in your credit report is used to determine your credit score. The three major credit reporting agencies in the United States are Equifax, Experian, and TransUnion. Equifax, Experian, and Dun & Bradstreet also provide business credit reports.

Source: https://www.thebalancemoney.com/what-is-a-credit-reporting-agency-5205579