Credit Questions & Answers
Website CertifiedPrivacy Protected
Questions & Answers > Credit Report > What is a Credit Report and How is it Generated?

What is a Credit Report and How is it Generated?

By Derek Brown
Published: Friday, June 25th, 2010

A Credit Report or what is also referred as credit file disclosure provides you with all the information gathered in your credit file or a written file of your credit history. The information written herein is maintained by the Consumer Reporting Agency (CRA) or the credit bureaus. The three national credit bureaus are Equifax, Experian and TransUnion which reports independently on the same way gathers or receives information from your previous and present creditors separately, which in turn has the discretion whether to report with all three CRA or not at all. The CRA are the one who tracks information that were sent by the bureaus and put them in a readable fashion. Your Credit Report becomes the byproduct.

The reporting agencies collaborate with the lenders, creditors, employers and other financial institutions to update and distribute your credit report to the appropriate institution.

Here’s an overview on how the credit industry works:

  1. If one applied for a credit card, the creditor (for example, Bank of America) request a copy of your credit file from the CRA of their choice, that is given the fact that you have completely agreed for them to “run” your credit. This will result to a “hard inquiry” which will be posted to your credit report the moment the financial institution reported your inquiry whether it is approved or declined. This will stay in your credit report for 2 years and it may create a negative impact to your credit worthiness if they see a lot of inquiry in a small amount of time.
  2. The creditor will base your approval and rates to offer from your credit report, credit score and debt information. It is important to understand that it is still the discretion of the financial institution whether to approve your application even if your credit score is high or low.
  3. If approved, every payment activity you made with them will be reported to the credit reporting agencies about every 30 days.
  4. The information received by the CRA’s from your creditor will then be posted to your credit report like any other information received from your other creditors (including unpaid hospital bill). This process repeats every time a new line of credit is opened.

An important point to end this note, inaccuracies may appear on your credit report, like a credit card that you never remembered opening. In these cases, filing a dispute is important because this is also an indication of fraud or identity theft. Under US Federal Law, you are entitled to a free credit report every year or after every dispute.

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.