Credit Reporting Agencies - How Important Are They To Your Credit

When it's time to check a consumer's credit report, a lender may request the consumer's credit report from one of the three major credit reporting agencies. These credit reporting agencies compile a myriad of the consumer's data and sell it to the requesting lender. A lender will use the information contained in the credit report to evaluate the consumer's financial stability and their ability to repay the debt. Consumers with too much debt may be categorized as too much of a risk.

Who are the three major Credit Reporting Agencies?

The three major credit reporting agencies are Equifax, TransUnion, and Experian.

What is in a credit report?

Credit reporting agencies compile consumer data into the following main categories: personal information,  credit inquiries, accounts and public records and collection items.

What kind of personal information is contained in a credit report?

The consumer's name, home address, Social Security number, date of birth and employment information is commonly contained within a credit report. Credit reporting agencies acquire consumers' personal information from their lenders.

What is a credit inquiry?

There are two types of inquiries – a “soft hit” inquiry and “hard hit” inquiry. Usually, anytime a consumer applies for a home mortgage, car loan or credit card, the lender may request a copy of the consumer's credit report. Each request is consider a “hard hit” inquiry, or voluntary inquiry. The credit reporting agencies record these “hard hit inquiries.” Too many “hard hit” inquiries could lower a consumer's credit score.

A lender may view a consumer with too many “hard hit” inquiries as a credit risk.  A “soft hit” inquiry is recorded anytime a debt collection agency, lender or some other entity requests a consumer's credit report in an effort to obtain contact information. The credit inquiry section of the credit report will usually contain a list of everyone who has accessed your credit report in the last two years.

What kind of accounts show up on a credit report?

Most lenders report consumer account activity to the three major credit reporting agencies. Many of the credit accounts held by a consumer are reported to the three major credit reporting agencies on a regular basis.

For more information about credit reporting agencies, contact one of the three major credit reporting bureaus. If you would like to know more about debt related matters, you can find contact information for NCO Financial Systems, Inc. on every page of our consumer help unit website. An NCO Financial Systems, Inc. representative is ready to handle your inquiry.

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