With all of the focus today on credit and credit scores, you might find yourself wondering exactly how it is that your credit score is compiled and who it is that does the compiling.
The responsibility for maintaining your credit report and determining your credit score falls on the shoulders of various credit reporting agencies… companies that deal solely in maintaining records of payments and non-payments for all of the individuals that they receive reports on.
Several different credit reporting agencies exist, and different creditors can prefer to work with specific ones or with all of them.
While many people know that credit reporting agencies exist, they may not be sure as to exactly what services these agencies perform.
Compiling Reports from Creditors
One of the major duties of credit reporting agencies is to compile reports from creditors in order to establish a credit history for the individuals that they receive the reports on.
Each time you make a payment on time, there is a good chance that a positive report will be sent to at least one (and sometimes all) of the credit reporting agencies. When you miss payments, a negative report might be sent.
The credit reporting agencies compile these reports in the credit file that holds your past reports, and the reports in the file can stay there for years before they finally expire.
It is from these files that credit reporting agencies generate your credit score and create a credit report on you when it is requested..
Calculating Credit Scores
Alongside of the compiling of reports from creditors, the credit reporting agencies are also responsible for generating your credit score so that potential lenders and creditors can try and determine how much of a credit risk you may be.
Your credit score has the potential to change with each positive or negative report that is received and placed into your file… positive reports can improve your score, while negative reports bring it down.
Since different creditors may choose to file reports with different agencies, your credit score can also vary slightly depending upon which agency it's requested from.
For this reason it's a good idea to inquire as to whether reports will be made regularly and to whom they'll be made when applying for a loan or credit line.
Issuing Credit Reports
A bit more detailed than your credit score, credit reporting agencies also produce full credit reports for those creditors or employers who request them. These reports show your credit score as well as a listing of the reports that you've received over a period of time… this time can vary from 6 months to several years.
You can also request a copy of your own credit report, either by ordering it from a credit agency or by applying for a free credit report via certain government agencies (depending upon where you live) or credit monitoring services who in turn will try to sell you a subscription to their service which tells you when changes are made to your credit report.
Investigating Report Claims
Since your credit is so important, you have the right to dispute some of the reports that are contained within your credit file. Should you request a copy of your credit report and find that it contains errors or inaccurate information, you can contact the credit reporting agency that issued the report and request that they investigate the error.
They might find that the debt or other information is legitimate, but in many cases they do find errors which are then removed completely from your credit history often improving your credit score in the process.
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