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How Credit Reporting Agencies Work |
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With all of the focus today on credit and credit scores, you
might find yourself wondering exactly how it is that your credit
score is compiled and who it is that does the compiling.
The responsibility for maintaining your credit report and
determining your credit score falls on the shoulders of various
credit reporting agencies... companies that deal solely in
maintaining records of payments and non-payments for all of the
individuals that they receive reports on.
Several different credit reporting agencies exist, and different
creditors can prefer to work with specific ones or with all of
them.
While many people know that credit reporting agencies exist,
they may not be sure as to exactly what services these agencies
perform.
Compiling Reports from Creditors
One of the major duties of credit reporting agencies is to
compile reports from creditors in order to establish a credit
history for the individuals that they receive the reports on.
Each time you make a payment on time, there is a good chance
that a positive report will be sent to at least one (and
sometimes all) of the credit reporting agencies. When you miss
payments, a negative report might be sent.
The credit reporting agencies compile these reports in the
credit file that holds your past reports, and the reports in the
file can |
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stay there for years before they finally expire.
It is from these files that credit reporting agencies generate
your credit score and create a credit report on you when it is
requested..
Calculating Credit Scores
Alongside of the compiling of reports from creditors, the credit
reporting agencies are also responsible for generating your
credit score so that potential lenders and creditors can try and
determine how much of a credit risk you may be.
Your credit score has the potential to change with each positive
or negative report that is received and placed into your file...
positive reports can improve your score, while negative reports
bring it down.
Since different creditors may choose to file reports with
different agencies, your credit score can also vary slightly
depending upon which agency it's requested from.
For this reason it's a good idea to inquire as to whether
reports will be made regularly and to whom they'll be made when
applying for a loan or credit line.
Issuing Credit Reports
A bit more detailed than your credit score, credit reporting
agencies also produce full credit reports for those creditors or
employers who request them. These reports show your credit score
as well as a listing of the reports that you've received over a
period of time... this time can vary from |
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Good background reading before you take out a loan
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