You might be surprised to know that in and around the 1960s, there were thousands of credits reporting agencies. Credit reporting agencies grew in their number at an astronomical rate because creditors wanted to know about the credit worthiness of an individual before they lent the money. Credit card companies and lending institutions wanted to know how safe was an individual to allow the use of credit before they approved them for credit. This is how the idea of collecting information on the credit behavior of an individual came into place. The system was created that made a profile of an individual regarding his borrowing habits. These were called credit reports and still are.
Today, after many surges of mergers and buyouts there are three main credit reporting agencies that collect and compile your financial information that is connected to credit. These three credit agencies are also known as the national credit bureaus and go by the name of Experian, formly known as TRW, Equifax and TransUnion. These are the three main national credit reporting agencies that most of the creditors subscribe to. They maintain your credit information in a file that is known as your credit report or your credit file.
It might be strange but it is also common nevertheless that many people are under the impression that the credit reporting agencies are somehow government related organizations and connected to the federal government.
The truth in fact is the credit reporting agencies are profit-making companies that gather and sell information about consumers to creditors and other institutions and individuals eligible to access a person’s credit report and not government organizations.
The basis of this misconception could be that somehow the words “agencies” and “bureaus” that gives the impression that they might be federal agencies. However, you must be very clear in your mind that credit bureaus they are private companies and not run by the federal government.
However, the federal government has actively stepped in to monitor the functioning of the credit reporting agencies because of this sometime back, they were earning unpopular reputations due to inaccuracies and incompleteness of the credit files of thousands of consumers. Since there was no hard and fast regulation governing the way they were supposed to conduct business, almost anyone could access your credit file as well. Mistakes on the credit files were common and not much recourse to correcting them was open to the individual. The federal government has got involved and corrected a lot of problems by setting legislative requirements for these credit reporting agencies and drafting some very targeted laws that give consumers a lot of flights over their own credit files maintained by these CRAs. In the next few post we learn about the fair credit reporting act, FCRA and the fair and accurate credit reporting act, FACT Act.