Financial Education



Credit Reporting Agencys

How Lenders and Credit Reporting Agencies Work Together

A lender agrees to lend money to a borrower with certain conditions. Lenders can be banks, loan companies, credit card issuers, or individuals. As part of their process of managing the loans they made, most lenders report back to credit reporting agencies on a consumer's payment activity. These lenders have access to credit reports in order to make reliable loan decisions on individual consumers.

Credit reporting agencies compile and sell information on consumers' credit histories -- their pattern of borrowing and repaying loans and their payment of personal bills. A report containing this information, as well as other information about an individual, is called a credit report.

Credit Scores are a Snapshot of Your Credit
Credit reporting agencies can also provide lenders with a credit score based on the information in your credit file. A credit score is arrived at by applying a mathematical equation to a borrower's credit history, which results in a score that indicates what kind of credit risk that borrower represents.

The Three Major Credit Reporting Agencies
There are three major credit reporting agencies: Equifax, Experian, and TransUnion. Most national lenders report information to all three agencies. Smaller lenders, however, may report to only one agency. That's why your credit report might be different at each of the credit reporting agencies.

When you apply for credit, lenders purchase your credit report and often a credit score from a credit reporting agency to help decide whether to extend you credit and at what terms. For contact information for the three major credit reporting agencies: click here.