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Understanding How Credit Bureaus Work

By Karen Anderson
Published: Friday, July 23rd, 2010

Consumers may find it hard to understand the roles of the credit bureaus especially if they are not geared to attaining good FICO scores. But every consumer should acquaint themselves on the important roles done by the three reporting agencies in order for them to know what interventions or credit report tips could be used to improve ratings. Credit bureaus are important if you want to have a good chance for financial enhancement. Not only do they affect credit opportunities but also your chances for employment or for being approved of a loan or mortgage. Almost all financial institutions depend on the bureaus to predict their chances of lending you the money you applied for.

There are three main credit bureaus that act as storage of your financial data in the past. These are Equifax, Experian and TransUnion. These bureaus serve as a chest of all the financial transactions you engage in. Their reports may vary from time to time because they also depend on the information which merchants submit. There are ties when some reports may not be accurate and some information may be appearing in one credit bureau but not in the others. If this happens, there is a need for correction so you are insured of good credit ratings which appear consistently among them.

The reporting agencies consolidate the respective data which merchants and lenders submit. They may not all be consistent with each other because merchants are not required to submit to all the three agencies. Submission depends upon the discretion of the financial institution. They then process the reports to be become scores as they have your records calculated by FICO. Once you apply for a loan, the lending company will look into either all the credit reports from the three bureaus or will just settle for one report. In either case, the lender still depends on the results published by the bureaus.

In the presence of errors, the consumer is expected to file for complaint. This could only be done if a credit report is secured from the agency and reviewed for questionable items. Credit report tips from experts are composed of useful ideas which include the securing of a copy of your credit report from the three agencies. Equifax, for instance, can provide a copy of the credit report which can be purchased at minimal amount. The same is also true with other score brands like the Experian and TransUnion. Once an error is identified, the consumer is allowed to file for appeal for the deletion of the item. Proofs like receipts and other documents should be prepared to acknowledgment of claim.

The three main reporting agencies are essential entities when it comes to financial growth of consumers. They release reports and at the same time they are also capable of providing only the best credit report tips for the consumers to grab the chance of raising their scores. Credit bureaus act as the backbone to the consumer-lender relationship as they serve as bridges to financial transactions.

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