How To Understand Credit Score Agencies

What are credit score agencies and why do you need to know about them? In the US, your credit rating is extremely important. It determines whether or not you can own a house, a car, or any other big-ticket item and the amount of interest you will pay in order to maintain the purchase. Credit scores are compiled by agencies (otherwise known as credit bureaus). Understanding what they are, what they do, and why they are so important can help you improve your credit worthiness or maintain your current credit standing.

The three most prominent credit score agencies are TransUnion, Equifax and Experian. Their purpose is to provide credit scores to lenders.

These agencies collect any kind of information relative to credit, personal debts, loan information, etc., and hand this data over to lenders, banks and even employers who use it to evaluate your risk. Just some of the information a credit bureau collects includes personal information such as your name, previous and current addresses; financial data such as how much credit you use with respect to how much is available to you; payment history (whether your bills are paid on time); the types of credit you currently have; and any bankruptcies or tax liens.

Where do these agencies get this kind of information? From creditors, lenders, utility departments, debt collection agencies, and open records. Both positive and negative information is turned in such as data relative to when bills are late, debts are paid off, or the account has been maintained well for a long time.

Once a credit bureau has all the information, it is collected and put
through a complex algorithm to come up with a number: your credit score. Any lender, bank, insurance company or employer who requests to check your credit can then obtain your score and your detailed credit report through the agency.

Of course you too can have access to your own credit score for free. You are only allowed to access this information one time per year so that you can check how you are doing and make sure that everything is on the up and up. Credit bureaus must grant you this as stipulated by the Fair Credit Reporting Act (FCRA) which is enforced by the Federal Trade Commission (FTC).

If you are interested in more information about the three main credit bureaus, you can also contact them directly:

Here is the TransUnion address and contact number:
Trans Union
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
(800) 916-8800 or (800) 888-4213

Here is the Experian address (keep in mind that this agency was previously called TRW) and contanct number:
Experian
P.O. Box 2104
Allen, TX 75013-2104
(888) 397-3742

Here is the Equifax address and contact number:
Equifax
P.O. Box 105873
Atlanta, GA 30348
(800) 685-1111

Hopefully the above information has provided you with a better understanding of credit score agencies and how you can raise your credit score.