The Credit reporting agencies play an important role in gathering information about millions of U.S citizens annually from various sources. This information is then compiled and offered in the form of a credit report. Because of this, lenders and financial institutions can take credit decisions about individuals in just minutes.
Credit reporting agencies, also known as credit bureaus, are private and profit institutions maintaining an individual’s financial record. The financial information is collected from banks, lenders, creditors, mortgage institutions, credit card companies and many others. The agencies then compile this information and prepare the credit report. The credit report is divided into four sections and three basic elements. The three elements of the credit report are credit rating, credit score and credit history. The three official credit reporting agencies do not give the credit score on the credit report.
The credit report is indicative of a person’s credit worthiness, his financial problems, defaults, outstanding loans and debts, and late payments. It also contains details of his lawsuits and arrests. Equifax, Experian and TransUnion are the three major credit reporting agencies in the U.S, though there are others too. These credit reporting agencies are bound by federal laws, under which they have to provide a free credit report to the consumer on his request. The agencies cannot provide the consumer’s report to anyone without their written permission.
There are three ways to contact the agencies for getting a credit report, to dispute an entry in the credit report or to report identity theft. A person can contact them on the phone, through certified mail or online, through the official website, annualcreditreport.com. To initiate a dispute with the credit agencies, it is recommended to do so by writing a dispute letter or online by following the procedure. When you dispute an entry, the agencies are legally bound to investigate it within 30 days and rectify the error, if they cannot find proof of it.
One question that might arise in the mind of the consumer is that if these credit reporting agencies are required to provide free credit report, how do they make a profit? The agencies do not just compile information and provide reports. They offer a multitude of services to the consumer, which, if he so wishes, can opt for. Some of these services are calculating credit score based on the credit report, credit monitoring services, preparing business credit reports and setting up an alert against identity theft.