What is a credit reporting agency?

A credit reporting agency (or credit bureau) is a company that tracks your financial dealings over time. They stay abreast of your credit, including your account balances and your payment history. Their function is as an information source for people or organizations that have good reason to investigate your credit history.

It is important to understand that credit bureaus have no input into credit decisions; in other words, they do not approve or deny your credit applications. Instead, they provide information that helps lenders make informed decisions.

This information is gathered from a number of sources. Your creditors provide most of the information pertaining to your individual accounts. In fact, most creditors report the standing of your account every month. For this reason, your credit report will often immediately reflect changes in your account status (e.g., late payments).

In some cases, the credit bureau will collect information from public records. Bankruptcy or alimony payments, for instance, are generally matters of public record. Because such circumstances directly relate to your financial situation, credit bureaus will include that kind of information on your report.

There are three credit bureaus: Equifax, Experian, and Trans Union. Credit checks are performed regularly through each of the three companies. While there might be slight discrepancies in their records, the bureaus will, in most cases, have very similar records.

Every so often, you should make a point of requesting your credit reports and examining them carefully. The bureaus are required to check on any information you believe to be erroneous. If you see a mistake on your report, notify the bureau immediately.