Wednesday, January 15, 2014

What are Credit Reporting Agencies?

Credit reporting agencies are companies that collect information from various sources about an individual's lending and repayment history. This information is then used by lenders and other creditors to make underwriting decisions. In the United States, the terms "credit reporting agencies" and "credit bureaus" are often used interchangeably.

Credit Reporting Agencies: The Big Three

Most people who have dealt with credit reporting agencies, or credit bureaus, are familiar with The Big Three: Equifax, Experian, and TransUnion. These three are the nation's largest consumer data collectors, and just about every lender in the United States will use one of these three. However, there are smaller agencies, generally used for specific industries or for commercial use. The Big Three are private, for-profit companies, so they are not affiliated with the government. One of the ways they make money is by selling your name and address to credit card and insurance companies. That is why you will receive pre-approval letters in the mail. You can put a stop to receiving many of those by opting out. Contact one of the three bureaus for the number, or request a form that will opt you out permanently.

Credit Reporting Agencies: Alternative Credit Bureaus

There are also a few alternative credit bureaus in the United States. These bureaus collect data on non-financial debt payment information such as your rent, utilities, cable, or phone. These payments are not typically reflected on your Big Three credit reports. Payment Reporting Builds Credit, Inc. (PRBC) is the leading company in this field, and enables customers to self-enroll and build a positive credit report by reporting on-time payments for alternative bills. Although employers, lenders, and landlords do not pull from PRBC, you can request a file be sent to them to show good history for those alternative payments that are not reported to The Big Three.

Credit Reporting Agencies: Business and Commercial Bureaus

The Big Three are for consumers, and there is not much reported to them about businesses unless the business is a sole proprietorship using the individual's social security number rather than an employer identification number. However, for commercial businesses, there are commercial bureaus which gather information on the business. One of the most popular commercial bureau's is Dun & Bradstreet. Dun and Bradstreet collects information on businesses that can be used for lending purposes, business-to-business marketing, and supply chain management. The downside to this bureau is that charges businesses to improve their ratings, and as a result has had several lawsuits filed against them by those who refused to pay in order to improve their rating. Still, the company maintains information on more than 220 million companies worldwide.

For more information on how to pull your credit report from one of the big three credit reporting agencies, visit today.

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