A consumer reporting agency is actually designed to help creditors determine whether to extend loans to borrowers (consumers). It may also be called a credit bureau or a credit reporting agency. In the US, there are three big agencies that banks and other lending companies may contact to determine the creditworthiness of a potential borrower. These are Equifax, Experian, and TransUnion. All three have access to the same information and can produce credit reports and credit scoring when requested.
Another consumer reporting agency that is recent in establishment is Pay Rent, Build Credit (PRBC). The main difference between this agency and others is that it focuses on customer reporting of timely payments, such as payments of rent, car payments and et cetera. Consumers have to enroll and do their own reporting, but it’s a completely different approach.
The traditional consumer reporting agency focuses only on the negative, when you failed to meet credit obligations, whereas PRBC focuses on the positive by providing information about those times when you did meet your obligations on time. For some this has provided a solution, especially when they may have outstanding debt but have always paid on time and been religious about paying rent and utility bills. This is especially the case when it comes to considering potential renters, and Equifax, Experian or TransUnion reports won’t tell landlords if you’ve been a good renter, though they may inform landlords if you’ve walked out on leases or failed to pay rent. PRBC can provide details about how you handle your debt responsibly, which other consumer reporting agencies won’t provide.
As of 2003, people are entitled to request one free credit report per year from one of the big three agencies. Requesting this report can be an important step in understanding if you have any outstanding debt that needs to be paid, or if you have anything on your report that is not correct. According to some studies, there is a high incidence of mistakes on reports from consumer reporting agency organizations. Knowing what your credit report contains can be valuable if you intend to apply for a large loan, or even a small one, and you want the lowest interest rate possible.
Information held by a consumer reporting agency is gathered and reported to the agency by those people to whom you owe debt. It can include things like whether you made your payments on time, if you failed to pay a debt, whether you have claimed bankruptcy (up to 10 years after the bankruptcy was claimed), and if you have any debts in collection. Essentially almost anyone, except most private individuals, can report debt to a consumer reporting agency, especially if that debt is not being paid in accordance with agreements you signed when you contracted the debt.