Credit Reporting Companies
Credit reporting companies also called credit bureaus are companies that compile the credit information of consumers and then sell them to businesses. The collected information is presented in the form of a credit report. There are three main credit bureaus in the United States. Reports from these three bureaus; Equifax, TransUnion, and Experian are accepted by all companies that request for credit reports. These companies are private companies but they are regulated by the government through the Fair Credit Reporting Act (FCRA).
How do these companies collect data?
The companies pull the public information of consumers from public records such as local courts and the state. The relevant public information includes tax liens and bankruptcy information. They also have companies who provide them with credit-related information.
The three credit bureaus work independently and that explains why the reports are different. They do not share the information with each other. There is an exception to this practice; when there is a fraud alert, these three bureaus communicate to ensure that the issue is effectively dealt with.
However, when you miss payments, your creditors may report to all three credit bureaus or one of them. The information may appear on all three or one of them. Although the three major credit reporting companies try to include all relevant information in your report they may miss some information. However, since they collect the information independently, the information that is not captured in one of the reports will be captured in another.
However, some minor credit reporting companies specialize in collecting data for a particular purpose. Some agencies only collect bank information.
This information is then sold to companies who need it for reviewing purposes. However, credit bureaus only sell the report to people who have a legal reason to review your report. For instance, loan companies can request for your data when you apply for a loan. Even your credit score determines the interest rate on your loan. A company that wants to prescreen you for their products can also request for your credit information.
When do I check my credit report?
You may ask one free credit report from each of the three major credit reporting agencies every year. That means you can access three free credit reports in a year. Many people check all three reports at the end of the year. However, it is recommended that you plan and take the reports all year round. You can take the report every four months. This will help you to keep updated on your credit information all year round.
You can access your free credit report from annualcreditreport.com. Annualcreditreport.com was created for all three major credit bureaus and so you can order all three credit reports from that site. You can also contact the individual credit reporting companies for the report.
You will be able to spot any wrong information in your report and then you can correct it. It is better to correct wrong information before you are denied credit based on that wrong information.
How do I correct inaccurate information?
When you spot wrong information on your report, you can file a dispute to correct the information. You can dispute any information you consider inaccurate on your credit report. However, not all information will be corrected. Credit reporting companies have guidelines and they will only delete or correct information that is proven to be inaccurate. You can dispute inaccurate credit items, accounts that are not yours, reported late payments that were made before due dates, wrong credit limits, inaccurate account status, or inaccurate creditor.
When you find any inaccurate information you want to dispute, the first step is to decide on how to dispute the information. You can choose to dispute the information through the online process, by mail, or over the phone. After filing the dispute, you will need to wait patiently for the results of the dispute.
The credit reporting company will contact the company who provided the information you want to dispute. The information provider will then investigate the information and revert back to the credit bureau. If your claims are true and it is established that the information on your credit report is indeed inaccurate, the credit reporting company will correct the information on your report. You can also request that the credit reporting company send the results of the dispute to companies that accessed your credit report in the last six months.
You should confirm from all three reports that the information on all of them is accurate. Inaccurate data on one report is likely to be inaccurate on all other reports. Whenever you see an error in one credit report it is advisable to check the other reports and when the error is corrected, check to confirm that it is corrected in all three credit reports.
Protecting your credit from fraud
There are instances where criminals use your identity to access credit. You will then incur the debt of someone you do not even know. Such criminals do not bother to pay back the credit they took and you may have to pay for it. This can also affect your FICO credit score. You may never know that you are a victim of identity fraud until you check your credit report. In most cases, the credit may have accumulated several penalty fees due to missed payments.
You can prevent this unfortunate incident from happening to you by locking your credit. When you lock your credit, your credit information will not be visible to other people until you unlock it. The process of locking your credit is easy. You can easily do that from your computer or smartphone. You can always unlock it when you are ready to apply for credit.
Fair Isaac Corporation (FICO)
When we talk of credit reporting companies, FICO also comes to mind. However, FICO is not a credit reporting company although it is always associated with credit. FICO does an entirely different job from the credit reporting companies. FICO compiles credit scores and credit reports. All it does is to collect data from the three major credit reporting companies to develop the credit score.
The FICO credit score determines your creditworthiness. A high credit score means you are more creditworthy. The higher the score, the better your chances of accessing credit. The FICO credit score also plays an important role in determining the interest rate you pay on your credit. The higher the credit score, the lower the interest rate. According to lenders, it is less risky to grant loans to people with high credit scores since there is a high possibility that they will pay back on time.
When you have a low credit score, you should make attempts to improve it. Paying your loans on time and clearing your debts are some of the simple methods you can use to repair your credit. Some people also hire credit repair companies to help them out.