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Which companies maintain credit reports and how do the credit card companies use them?


If you are signed up for a credit card you’ve probably heard of the three major credit reporting agencies, which are, Equifax, Experian and TransUnion. But have you ever wondered what they actually do, what kind of reports they collect and who these reports go to? We’ll answer all of these questions for you in this article.

What Do Credit Reporting Agencies Do

Credit reporting agencies are responsible for collecting and maintaining information than makes up your credit history and in the long run, your credit report. The information they collect includes the following.

  • Existing credit accounts
  • Payment history from financial institutions – credit card companies, banks etc.
  • Payment history from telephone and utility companies

How Do They Maintain Credit Reports

Thousands of such organizations (credit card companies, banks, telephone companies, retailers and finance companies) send in updates to all three credit reporting agencies once a month. Credit reporting agencies maintain credit reports based on this information.

All three of these credit reporting companies are for-profit companies. Therefore, it isn’t necessary that they’re all saying the same things about you. Credit reporting companies sell your credit reports to creditors, insurers and any other business to which it’s “permissible”.

In most cases, the positive information about you remains on your credit report for life. On the other hand, the negative information has a lifespan of 7 years on average. Negative information might include charge-offs, closed accounts, late payments, tax liens, collection accounts etc.

What Do They Do With This Information

Once they have all of your information, they maintain credit reports for every cardholder. Next, the credit reporting agencies sell your information to credit lenders. From this information credit lenders pass their judgment on you and determine your creditworthiness.

Accessing Your Credit Reports

This information makes it easier for credit lenders to decide whether or not they should lend to you and at what rate (APR). Credit lenders sometimes sell your information to your potential employers or insurance companies. You can also get a hold of your credit report by buying it from either the credit lenders or the credit reporting agencies. Generally, it’s a good idea to keep an eye out for your credit report and see what it says because that’s what your credit lenders make decisions on. Most importantly you must make sure that all three credit reports are accurate. Even though they maintain credit reports you don’t want a simple mistake to affect yours negatively.

Credit Scores

Credit reporting agencies not only maintain credit reports but are also in charge of credit scores too. Your credit reports are also used to generate a very important number – your credit score. This three digit number gives off a lot of information to credit lenders without them having to go through your entire credit report. Your FICO score is an important credit score that you need to keep well maintained — and you have dozens of FICO scores.

Since your credit reports are generated by three different credit reporting agencies, the corresponding credit score will also vary accordingly. There are a lot of credit scoring models being used to determine your creditworthiness. What you need to do is ensure that the credit reporting agencies maintain credit reports associated with your cards accurately so your credit score isn’t negatively affected due to a mistake.

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