The Major Credit Reporting Agencies
THE MAJOR CREDIT REPORTING AGENCIES
The credit reporting agencies (CRAs), also known as credit bureaus, gather all of your credit information, so it’s wise to be well-informed about their function. Your credit history, scores and reports are extremely important, so we want to make sure you have the facts straight. Lenders go to the three main credit bureaus — Experian, TransUnion and Equifax — when looking to pull and review your credit reports. There are numerous CRAs in the business besides these three agencies. Still, there’s a lot of confusion when it comes to what the major credit bureaus actually do. What kind of information do they collect? Where does that information end up? Do they create credit scores or credit reports? And what’s the difference? Let’s break it down.
What Do the Major Credit Reporting Agencies Do?
The short answer is that these agencies compile details about your credit history so potential lenders can see what type of risk they’d be taking in giving you a new credit card or loan.
The major credit bureaus are all for-profit companies and are not owned by the government. They have reporting relationships with banks, credit card issuers, lenders and other financial organizations and compile your credit history into credit reports. To contact any bureau directly, on the phone for example, check their individual websites for more information.
What Kind of Information Do Credit Bureaus Collect? Credit reports include information about your existing credit accounts as well your payment history from a variety of financial institutions including credit card companies, banks, mortgage companies and other lenders you may have worked with in the past.
Other businesses, like telephone and utility companies, may also report information to credit bureaus, but non-lending organizations like these tend to only report delinquent payments and other negative information (an account sent to collections, for example).
The major credit reporting agencies collect a lot of information, but there are five key factors listed on your credit reports that are used to determine your creditworthiness when you need a loan or additional line of credit. These factors are: Your payment history, the types of accounts in your credit file, your amount of debt, how long you’ve had credit and the number of hard inquiries on your credit file.
What Is Done with This Information?
Once the major credit reporting agencies have collected all the aforementioned information, compiled your credit history, and generated a credit report, they sell that information back to the lenders, so they, in turn, can determine your creditworthiness. Based on your credit report, lenders can decide whether to lend to your money. If they decide you’re someone they want to do business with, the information supplied by the credit bureaus will be used to help determine what your interest rate will be.
How Long Do Credit Bureaus Keep My Information? Personal information — like your name, address, etc. — as well as positive financial information — like a strong payment history — can remain on your credit reports indefinitely.
The credit bureaus compile more troubling information as well to give insight into how risky of a potential borrower you are. Most of these details can remain on your credit reports for seven years, but the timeline can vary depending on the item.
Here’s a breakdown of how long the some of the negative information collected by the credit bureaus will likely stay on your credit reports.
- Bankruptcy: Ten years from the date of filing for Chapter 7 filings, seven years for Chapter 13 filings and seven years for each record marked as “Included in BK”
- Charge-Offs (when a creditor or lender writes off the balance of a delinquent debt, no longer expecting it to be repaid): Seven years
- Closed Accounts: Seven years if the account was paid late, no expiration date if the account was always paid on time
- Collection Accounts: Seven years from the last overdue payment on the original account
- Inquiries: Two years
- Late Payments: Seven years from the date of the past due payment
- Judgments: Seven years from the filing date if paid; longer if unpaid
- Tax Liens: Fifteen or more years if left unpaid, seven years from the date the lien is paid