Although credit rating agencies decide our financial fate, many of us still have many questions about them. Some don’t know how they operate, whereas, some don’t know what they are. Let’s us have a look at answers to some of the most frequently asked questions.
Who are Credit Rating Agencies?
These are agencies that keep track of your payment history. Although there are several agencies in the US, majority of people prefer three main agencies – Experian, Equifax, and Trans Union.
What’s Their Purpose?
Their purpose is to help you choose the best or the most credible person for required task. Hence, the score they 
update is used by every lender, employer, home owner, and many other people to check credibility of the second party. Every lender, for instance, would check this score of the borrower before lending the loan amount.
How do Credit Reporting Agencies Operate?
These agencies take information from financial institutions of every individual. So, every time you apply for a loan or make late payments, it’s reported to the agencies. However, this doesn’t give them the rights to design your credit score on free will. They have to comply with regulations set by Fair Credit Reporting Act.
Why 3 Credit Reporting Agencies?
As mentioned earlier, there are several agencies in the country. However, these three are quite reliable and accurate reporting agencies. They don’t share reports and information to each other. Hence, there would be minor difference in all three reports, as the method they use to derive a score is different.
What is the Information they Collect?
The main aim of credit rating agencies is to keep track of your payment history. However, they collect more than just payment information. They have records on:
- Law Suits
- Tax liens
- You Personal Information (address, phone number, income, Social Security, and so on)
- Legal Matters
Can I Get a Free Credit Report?
You are entitled to receive one free report each year from each of the credit reporting agencies. Simple visit any of the agencies’ website, and avail your free copy. However, if you wish to acquire more than one report in a year, you will have to pay them.
You know, I deal with credit worries every last day with my occupation as a housing consultant. I see so many more bad credit scores than good credit scores. People need to picture that with a little time and work, they can get themselves back into a situation to buy right.