Credit Reporting Agency

A credit reporting agency is a business that maintains historical credit information on individuals and businesses. They receive reports from lenders and various other sources which are compiled in a credit report that includes a credit score when issued. They may also be referred to as a credit reporting bureau.

Credit reporting agencies serve various purposes in the credit industry. They maintain credit information, calculate credit scores, provide credit reports and partner with credit issuers for marketing.

Credit reporting agencies receive various types of information which can be included in their offerings for customers. Credit reporting agencies are generally one of two types: reporting either on individuals or on businesses. The largest consumer credit reporting agencies are Experian, Equifax and TransUnion. Experian also does commercial reporting, along with Dun & Bradstreet.

Credit agencies have the ability to receive a wide range of information and data that can be included in a credit report. Experian, Equifax and TransUnion are the three largest credit reporting providers in the U.S. They are known for receiving standard credit information and providing comprehensive credit reports on a borrower’s basic credit history. They set industry standards for reporting and scoring methodologies.

Numerous other credit reporting agencies also exist beyond the largest three. Comprehensively, lenders work with credit reporting agencies to receive customized reports including specific information which influences a credit decision. Credit reporting agencies can partner with a wide range of companies to receive all types of credit data for their customers. Beyond just basic credit account information many credit reporting agencies also receive public records and additional payment data on cell phone bills, utility bills and rent payments. A number of new credit reporting agencies are working to provide greater access to the underbanked population by developing credit reports for thin file borrowers that are based on alternative data rather than just credit accounts.

Credit reports follow a standard format that includes a trade line for each credit account established by a borrower. Trade lines show the amount of credit issued, a borrower’s monthly payments and any delinquent payments. Delinquent payments are reported to a credit agency after two consecutive missed payments. Therefore delinquent credit history on a trade line will typically begin with a 60 days past due report, followed by 90 days, 120 days and so on. Trade lines also show charge-offs if a borrower defaults.

Trade lines can be reported for a wide range of accounts. They generally include credit accounts but they may also include itemized occurrences such as cell phone payments, utility payments, tax debt or bankruptcy. Many credit reporting agencies also group ad hoc items separate from a trade line to provide comprehensive miscellaneous details.

Most adverse items reported on a credit report will remain there for seven years. Other items such as bankruptcies are included for ten years. Oversight of all credit reporting agency activities is governed by the Fair Credit Reporting Act (FCRA) and regulated by the Federal Trade Commission and the Consumer Financial Protection Bureau.

Credit reporting agencies partner with a wide range of financial institutions in the industry including credit card companies, banks and credit unions. Financial institutions obtain credit reports on individuals and businesses through hard inquiries that include a credit score and detailed information on individual trade line accounts. Financial institutions also partner with credit reporting agencies to provide target marketing lists and soft inquires for prequalification approvals.