Credit Reporting Companies Can Affect Your Credit Score

When a consumer applies for a credit card or a bank loan, the lender will most likely request a copy of the consumer's credit report from one of the three major credit reporting companies. The credit reporting companies collect different types of personal and financial data on consumers, compile it in a report and sell it to lenders and other interested parties. A lender primarily uses the information in the credit report to judge the consumer's financial situation and their ability to repay their debts. Consumers who have too much debt may be seen as a credit risk not worth taking.

Who are the three major credit reporting agencies?

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

What is in a credit report?

Credit reporting companies collect data on consumers in the following areas: public records and collection items, credit inquiries, accounts and personal information.

What type of  personal information do lenders have access to in a credit report?

A consumer's name, home address, employment information, Social Security number, and date of birth show up in the credit report. Credit reporting companies receive personal information from consumers when they fill out credit applications with lenders.

What are credit inquiries?

There are two kinds of inquiries: “soft hit” and “hard hit” inquiries. When a consumer applies for a credit card or an automobile loan, they are giving the lender permission to request their credit report. The lender's request is considered a “hard hit” inquiry.  Each “hard hit” inquiry, or voluntary inquiry is recorded by credit reporting companies and placed on the consumer's credit report. If a consumer has too many “hard hit” inquiries, it could have a negative effect on their credit score and affect their chances of getting approval for credit. 

Lenders generally view consumers with too many “hard hit” inquiries as a credit risk.

“Soft hit” inquiries are called involuntary inquiries. A “soft hit” inquiry is recorded every time a debt collector, lender or some other entity asks for the consumer's credit report to obtain contact information.

What kind of accounts show up on a credit report?

Many lenders will report consumer account activity to the credit reporting companies. Some of the credit accounts consumers have are reported to the credit reporting companies on a regular basis.

For more information about credit reporting companies, contact one of the three major credit reporting bureaus. If you would like to know more about debt related matters, contact an NCO Financial Systems, Inc. representative today. Contact information for NCO Financial Systems, Inc. can be found on every page of our Consumer Help Unit website.

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