How Does Credit Reporting Work?

People seem to worry a lot about their credit reports. What’s on my credit report? What does my credit report say about me? Is my credit report right? These are the types of questions I’ve heard others ask.

Despite the time that many people spend worrying about their credit reports, not everyone understands how the credit reporting process works. They understand how important their credit report is, but the world of credit reporting is a mystery to them. Here’s a brief overview of the process.

Credit reporting is handled by three different agencies. There are three companies, Experian, Trans Union, and Equifax, which compile credit reports. Whether you are applying for a mortgage, a car loan, or a new credit card, chances are that the company processing your application will request your credit report from one, two, or all of these agencies.

Companies you have credit with report your history to those agencies. Have you ever wondered how the credit reporting agencies get your information? It’s simple; your creditors give it to them. Your current creditors, such as mortgage companies, credit card companies, or installment loan holders, regularly send information to the agencies to build your credit report with.

Credit reports include more than your payment history. Most of the time, people think about their credit report detailing their payment histories. Are you on time with your payments? Maybe you’ve been late once or twice. That information is on your credit report, but there are other details, too. Reports include your available credit (credit limits on credit cards), your current balance on accounts, your high balances. They also record personal information such as your address, your employer, and your social security number.

Credit reports do not judge you. Many people think that their credit reports make some type of analysis about your creditworthiness. That’s not true, though. Credit reports only record the facts of your credit history. Your potential creditors use those facts to make decisions about your creditworthiness based upon their own criterion.

You can put your own information into your credit report. You are not at the mercy of your creditors when it comes to the information in your credit report. If you find an inaccuracy in your report, you can dispute it. The reporting agency will then require the company who reported that information to verify it. You can also add a statement to your report to explain out of the ordinary circumstances.

• Preparing Our 2006 Tax Return - Almost Completed
• Improve Your Credit Score - Four Steps To Take To Improve Yours

• Got my last free credit report for the year, did you get yours? I hope by now everyone is accessing their free credit...
• How to Fix a Mistake On Your Credit Report /caption] We all make mistakes, but when it comes to...

Tagged as: applying for a mortgage, car loan, credit card companies, credit cards, credit history, credit report, credit reporting agencies, credit reports, creditors, creditworthiness, equifax, Finances, installment loan, money, mortgage companies, payment histories, payment history, social security number, trans union