How It Works

I never thought about it like that.

When you stop to think about it, the credit reporting system in the US is really quite amazing. "The modernization of credit reporting has played a key role in providing American consumers rapid access to consumer credit," said Howard Beales, Director of the FTC's Bureau of Consumer Protection*. Unlike anywhere else in the world, for most consumers the US credit reporting system provides unparalleled access to credit and loans quickly and easily.

The three nationwide Credit Reporting Agencies (CRAs) Equifax, TransUnion and Experian are critical to supporting our credit-based economy. While CRAs do not determine whether you qualify for a loan or at what rate, they do collect and maintain a timely history of your credit activity as reported by the lenders with whom you have accounts, along with certain other financial related information such as public record information (bankruptcies, civil judgments, and tax liens) and collection items that a consumer may have. Financial institutions and others with a permissible purpose can obtain a copy of your credit report in order to make certain types of decisions about you. For example, when you apply for a new loan or credit card, a lender may use the information in your credit report to determine whether to lend you money and at what rate based on their own risk criteria. The credit reporting system makes it easier for you to acquire credit quickly and easily while allowing lenders to offer fair terms that match their risk. This enables you to obtain the credit you would like such as credit cards, instant in-store financing, auto financing or home loans in only minutes, hours, days or weeks, not months or even years.

Credit Reporting Benefits

Consumer Benefits

  1. Access and availability of credit
  2. Lower rates and prices
  3. Equitable treatment
  4. Mobility within credit rating

Business Benefits

  1. Able to serve a wider range of customers
  2. Reduces cost/time of applications
  3. Reduces risk and credit losses

How credit reporting works.

How equifax reporting worksClick here to learn how to access your credit file via online or mail

Because your credit history can be used by lenders, landlords, insurance companies and even employers to make important decisions about you, we recommend you check and monitor your credit report regularly to make sure it is accurate and free of fraud.


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