Credit Reporting

National Debt Crisis Center is a non-profit credit counseling agency dedicated to educating individuals about credit management and promoting financial literacy. This section of our Credit Management Series explains what credit reporting is, who credit reporting agencies are, and how credit reporting affects your lifestyle.

What Is Credit Reporting?

Credit reporting documents the past credit performance of an individual, and current status of an individual's credit standing. Your credit report will show current and past credit accounts, payment history, and outstanding debts.

In the United States, the federal government regulates how credit reporting must be done through The Fair Credit Reporting Act enacted in 1970. The Fair Credit Reporting Act allows credit reporting agencies to pull a credit report based on the following conditions:

• In response to a court order
• At the request of the consumer
• By a company or individual who is using it for:
  • credit transaction
  • employment purposes
  • insurance underwriting
  • determining eligibility for license from government (i.e. drivers license)
  • determining eligibility for loan
  • legitimate business need
• At the request of child support enforcement agency and/or official determining child support award

Who Are Credit Reporting Agencies?

According to the Fair Credit Reporting Act, a credit reporting agency is:

“… any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.” - Section 603.f

These credit reporting agencies can pull your credit report from any or all of the three major credit reporting bureaus: Equifax, Experian and Trans Union. Because creditors sometimes report your credit transactions at only one credit reporting bureau and not the others, the credit information at each credit reporting bureau can vary. Many credit reporting agencies will create a “tri-merge” credit report, which combines the credit reports from Equifax, Experian and Trans Union..

How Credit Reporting Affects Your Lifestyle

Like it or not, your credit report does affect your lifestyle. A credit report can determine if you are approved for a credit card, auto loan or home mortgage. Credit reporting is now used during the college admission process and pre-employment screening. Credit report influences how high your insurance premiums are and what interest rate you’ll pay on any credit card, auto loan or home mortgage.

Now, more than ever, credit reporting affects how others perceive you. For this reason, it’s important to know who’s accessing your credit report and what your credit score is.