What You Need To Know About The Big 3 Credit Reporting Agencies
The big 3 credit reporting agencies are vital for your financial health and well being. There are a lot of reasons why we might need a loan. Especially today wherein the economic crisis is really hurting everyone.
It may be for buying a home, financing a car, paying for education or even to start a business. For most people they will need some sort of loan to do these things. There is no easy way to go about borrowing money.
You have probably already applied for loans in the past and know how much risk you are taking, when borrowing. The same high tolerance also applies to large lending companies, banks, and mortgage lenders. In order to avoid or at least minimize these kinds of risks, creditors undergo the process of investigating the borrower’s credit history.
Depending on the history of the borrower will they know their final verdict if to approve a certain loan or not, and what interest rate to charge.
Credit reporting agencies or credit bureaus are the companies that are responsible for compiling and maintaining your credit history. Your history from credit card companies, banks, mortgage companies and other lending companies are all collected to generate a thorough credit history report.
Your collective borrowing and repayment history is what we call your credit history. This information will be used to calculate your credit score as well. Basically, credit reporting agencies are the institutions that provide accurate information on how individuals borrow and pay bills.
Creditors then use this information to assess if borrowers a likely to pay back a loan and the interest rate they should be given. Since credit reporting agencies are very influential companies, consumers with bad credit will find it difficult if not impossible to get loans. That is why you need to always be checking your credit reports from the 3 credit reporting agencies.
In the United States there are three well known national credit reporting agencies: Equifax, Experian and TransUnion. Though they are not the only credit reporting agency there are in the United States, these three agencies keep the largest databases of information for consumer credit.
All three of these agencies are responsible for collecting and reporting consumer credit information. Every time there is a new credit card application or loan application, they are the ones responsible for collecting that information. They are in charge of digging up records with regards to the consumer’s financial information, such as foreclosures, bankruptcies and court records.
Credit card and lending companies updates these agencies monthly with a complete credit report on how much it is the consumer owes and how the credit was paid. Credit reporting agencies are also responsible with supplying credit history information to lending companies with consumers who are applying for loans or credit card applications.
For so many years, credit agencies have been closed doors to consumers. Information on individual credit reports were withheld from consumers like why they were denied their credit card applications or if their credit reports were accurate and had no errors.
There was no way they could have verified the information that was given out to lending companies. The good news is that the United States congress had passed a Fair Credit Reporting Act, this was done in order to protect consumers with their dealings with credit reporting agencies.
You can find out more about this and even get your 3 free credit reports totally free from the following links.
Additional Resources:
The Federal Trade Commission’s Information on Free Annual Credit Reports