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How Do Credit Reporting Agencies Get And Keep My Information? – Credit Card Insider - YouTube
Channel: Credit Card Insider
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Hi, my name is John Ulzheimer and I am a
credit expert who contributes to
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CreditCardInsider.com and today's
question is this: How do the credit
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reporting agencies get and keep your
information? That's an excellent question
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that's something that not a lot of
consumers are privy and understand how
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this information actually makes it from
your bank all the way to the credit
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reporting agencies. Believe it or not, it
is an entirely voluntary system. There is
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no requirement for any bank, credit card
issuer, mortgage lender, student loan
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lender, to send any of your information to
any credit reporting agency at any time.
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They choose to do so, and the reason they choose to do so is because the carrot and
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the stick, right? I mean if your
information is going to be reported to
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a credit reporting agency for all to
see
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then the hypothesis is that you're more
likely to manage the account properly
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and pay your bills on time. The credit
reporting agencies essentially act as
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massive data warehouses and they will
gladly accept information from what's
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referred to as a "data furnisher," and a data furnisher in almost every single
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scenario is going to either be a collection agency or some sort of a
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financial institution like an auto
lender, or a credit card issuer. The credit
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reporting agencies do not pay any bank
to report information to them, however
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they make money because they're taking
this information and homogenizing it and
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combining with the information sent to
them by other banks to create this
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credit report about you and then they take that information and they sell it to
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other lenders, to insurance companies, to
utility companies, to employers, to you in
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some cases if you want to get a copy of
your own report and you end up buying it. So it's a very
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interesting business model. They have very low cost of goods and they take this information and
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then turn right around and sell it back
to people who gave them the information
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at no cost in the beginning. The minute
something is reported to the credit
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reporting agencies you have a
considerable amount of rights under the
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Fair Credit Reporting Act.
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The information has to be accurate and
if you do not believe that it is
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accurate you have the right to challenge
the information with the reporting
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agency and their obligation, because they
are keeping your information, is to
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perform a reasonable investigation if you
challenge some aspect of the account
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that they're maintaining. So you may challenge whether or not it's yours, you can
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challenge the balance. If it has some sort
of derogatory account history associated
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with it you can certainly challenge that information, and when you do challenge this
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information, the credit reporting
agencies will then contact the
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furnishing party, again either a bank or a collection agency, and they'll basically
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ask them "Hey look we got a dispute from
John, he's saying the balance is incorrect,
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can you please verify the current balance?" and then the bank also has an obligation
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to perform a reasonable investigation
and then send back a correction if one
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is warranted. And then the credit bureaus, as the stewards of the information, have to
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update the file and then send you a copy
of the report. And all of these things
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that I just went through are free. There's
no cost involved with doing any of this. You
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can do it on your own at no cost at all.
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Most companies do choose to report your
information to the reporting agencies,
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but because it is a voluntary system
there's no guarantee that they're going
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to do so, and if they do, there's no guarantee that they're going to report to all three of
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the reporting agencies: TransUnion, Experian, and Equifax. There are many scenarios where a
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financial institution may just choose to
report to one of them, or may choose just report to two
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of them, but not choose to report to all
three of them. If you're going to report
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something to a credit bureau you have to have an account with them. It's not just the wild wild west where
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people are sending information into the
bureaus and the bureaus are posting it
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on your report. You actually have to have
a contract and an active account and
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essentially certify that you're a valid service provider, that you have
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permission under the Fair Credit Reporting Act to pull credit reports and you're going to
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comply with the obligations of the
Act if you do choose to send information
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to the bureaus. So it's not a simple as
just anybody can report information like,
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for example, you're living in someone's
house and they're renting a room to you, and
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you miss your rent for one month, they just can't pick up a phone and call a credit
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bureau and stick that on your credit report, it's considerably more complicated than that.
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And, of course, you as the consumer, have the right to see what's on that report
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whenever you want to see it. You can go to annualcreditreport.com and pull a copy
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of it. You can pull it from all three reporting agencies once every 12 months at no cost.
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There are also a variety of other
websites that will gladly give you a
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credit report at no cost, as well. Depending on what state you live in there may
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actually be some state rights that
you've got that will give you additional free copies of
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your credit reports annually rather than
just the one copy you get pursuant to
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federal law at annualcreditreport.com. Point being is that you should be engaged
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with the information on your report
because it is a voluntary system. You
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never really know what's going to be on
it until you actually pull it and see it,
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and really the only way for the reporting agencies to know that
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something is wrong is for you to tell them "Hey look, something on my report is
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wrong, please go ahead and correct it." So if you have any other questions pertaining to credit
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or financial topics, then please submit them to Credit Card Insider or in the
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comments section below. Thanks for
watching, and have a nice day.
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