Do wonder how major credit reporting bureaus get your information? If you have a credit card, student loans, car loans, mortgages, etc, major credit bureaus know about this information. All this information is part of your credit history. Credit reporting agencies use your credit account information to make your credit reports. Some information from your credit reports is then used to calculate your credit score using credit scoring models such as the FICO score model or VantagaveScore model.
So, how do credit reporting companies get your information? This article will go into detail about how credit reporting bureaus obtain your information.
How do credit reporting companies get your information?
Your lenders and other companies that manage your accounts report your account activities to credit reporting agencies voluntarily. This information gets submitted usually on a monthly basis or whenever they make changes to your credit accounts such as payment activities and new account inquiries.
Other ways credit reporting companies use to get your information is by purchasing it. Three major credit bureaus and other reporting agencies buy your public information from public record providers. The information that can be purchased by major bureaus, includes but is not limited to, tax liens, bankruptcies, court hearings, and collections.
Your lenders and other companies that manage your accounts will report all or some of the following information to three major credit bureaus.
- Your payment activities
- New accounts
- Accounts’ balances
- The number of accounts in collections
- Credit limits on your accounts
- When you opened new accounts, etc.
What is a credit report?
A credit report is a detailed document that shows information related to your credit history. Your credit report will include the following:
- Identity information. Full name, social security number, address, date of birth, employment, etc.
- Public records(if any). Tax liens against your assets, court hearings, bankruptcy, foreclosure, accounts in collections, evictions, charge-offs, etc.
- Credit account applications. Any company that requested to view your credit profile
- Current credit accounts. Mortgages, car loans, student loans, personal loans, credit cards, etc.
Why is a credit report important?
Your credit report is very important to a wide range of businesses in many industries. For example, mortgage lenders, insurance companies, auto loan providers, credit card issuers, etc. use the information from your credit report to understand how you behave when it comes to debt and debt management.
Since there is risk involved in lending money, creditors rely on your past and current financial information to estimate your creditworthiness. Having a lot of negative information on your reports such as bankruptcies, foreclosures, or accounts in collections shows that you are a risky borrower. For this reason, you may be denied credit or pay a much higher interest rate with stricter terms when you get approved.
Almost every company that is in financial services could benefit from your credit report. Even the ones you never heard of, could use the same information against your or give you better services.
For example,
- Some employers can use the information from your annual credit report to decide whether they can give you a job or not.
- Insurance companies can use the information from your credit report to decide whether you get approved and the rate you will be paying.
- Creditors such as loan providers, auto loan companies, mortgage providers, and personal loan issuers rely on your credit report for approval and the terms regarding your loans.
- Other companies that can use your credit report are landlords, utility companies, and many more. As long as you will have services that involve you paying them money, they might check your report.
Where do credit bureaus get their information?
Most information credit bureaus use in their reports comes directly from your lenders, such as credit card issuers, auto loan providers, mortgage companies, banks, etc.
Other information regarding your accounts may come from public records providers. For example, if you have a bankruptcy or accounts in collections, reporting bureaus may get this information from public record providers.
How can I get a free copy of my annual credit report?
If you want a free copy of your credit report, you can get it from each one of the three major credit reporting agencies. Each credit bureau is required to give you a free copy of your credit report once in 12 months.
In order to get a free copy of your credit report, visit: www.annualcreditreport.com. You can also give them a call at (877) 322-8228.
How can I dispute errors in my credit report?
There are times when you will notice errors and inaccuracies in your credit report. When there are errors in your report, dispute them as soon as possible. This is because wrongly reported information in your report may affect your credit score and hinder your chances of qualifying for credit.
Disputing errors and inaccuracies in your credit report is one way to fix bad credit and keep your credit history healthy.
You can dispute errors and inaccuracies with each credit bureau that put together your credit report. Another alternative is to dispute errors to lenders that reported your information to credit bureaus. You can also dispute errors to bother lenders/debt collectors(if any) and credit reporting bureaus at the same time.
