The 3 main credit bureaus purpose and how they work.
If you have any type of credit history we’re going to assume you know lenders report to credit bureaus but what most people don’t understand is how these agencies work. Let’s dig in and get a better comprehension of who these agencies are and how why they are important. The three credit bureaus:
These credit agencies have a very important job and that’s to collect and keep up with everyone in the countries credit and your credit report. The credit bureaus work with financial institutions of all types such as banks, credit card companies, and mortgage lenders. The three credit bureaus are in no way shape or form connected to each other nor do they share your information. The main types of information they store is as follows:
- Late payments
- Outstanding debt
- Tax liens
- Medical bill collections
The credit bureaus profit very well from their efforts by maintaining credit information and coming up with a credit score connected to your profile. Credit bureaus will then sell the information to the lenders so they can make an informed decision whether or not you’re indeed a solid candidate for a loan. Not only will your credit report affect the decisions of approval this also allows banks and other lenders to gauge the type of interest rate to offer you. Most of the time the higher the credit scores lower the interest rates will be for consumers. As a consumer, you are also at right to purchase your own credit report from one of the agencies.
Specialty Credit Bureaus
There are many other credit companies that specialize in certain aspects credit reporting. This includes collecting your information for a specific type of business such as payday lenders, real estate managing companies, utility companies, insurance, and even cell phone companies. That is why your credit score is more important than ever. As you can see credit reporting is a huge business.