More than 190 million people in the United States have a credit card, car loan, mortgage or student loan. Almost every one of them has a credit file. The information in your credit file is obtained directly from the companies you have credit with, as well as from government agencies such as the legal court systems.
When you apply for any type of credit or financing, a credit report is generally obtained which contains information from at least one of the three major credit bureaus (Experian - formerly TRW, Equifax and Trans Union). Even though there are many smaller credit bureaus around United States, most credit grantors look at information from one of the “Big Three.”
A credit bureau collects and maintains information on the majority of Americans, but they are not affiliated with the government in any way. You have some rights and protection through the Fair Credit Reporting Act (FCRA). The credit bureaus are for-profit corporations and they sell your personal information for money.
The credit bureaus make money by gathering your credit information from credit grantors, listing the information in your credit file, and then selling it to other credit grantors who want to to see your credit history before they decide to lend you money. If you have shown any tendency to pay late or to default on paying your financial commitments, many credit grantors’ computers are programmed to immediately decline your application.
Credit bureaus get your personal information from the same lenders who grant you credit through agreements they have made that require the credit grantor to inform the credit bureau of everything that occurs in your relationship with the credit grantor.
For example, if you are late with a payment, this fact is quickly reported to at least one of the major credit bureaus and is added to your credit history. Credit reports not only show how you are currently managing your credit, they are also histories of everything you have done in the past as far as your credit is concerned.
