Major creditors report everything about your financial dealings with them to the credit bureaus. They do this every month by transmitting via the Internet an electronic file. This file contains information about all their customer accounts. This information includes balance, credit limit, terms, payment information, account number, date opened, and comments.
Some government records are also transmitted every month electronically to the credit bureaus. These records include liens on property, such as a house, car, furniture and equipment, as well as all public court documents, including judgments, statements of claim, and bankruptcy proceedings.
Protect yourself from mistakes on your credit file
Unless you get a copy of your credit report and read it, you have no way of knowing what kinds of comments are on your file. An honest mistake could end up putting someone else's poor record in your credit file. It happens every day. While the credit bureaus endeavor to provide accurate information, it really is up to you to confirm the accuracy of the report. Ultimately, you are the only one who really cares about what is on your report. So you cannot afford to be comfortably ignorant in these matters. You need to take responsibility for the management of your credit file. What you don't know can and will hurt you and your family.
Lenders use the internet to access your credit report
Lenders access an individual's credit report via the internet. Although lenders can order a credit report by telephone, the ability to instantly get a printable credit report makes the internet the medium of choice. It allows the lender to get a credit report independently of the credit bureau's office hours and make a quick decision about whether to approve a sale.
Automated credit decisions
Today, computers make most consumer credit decisions. Because lenders have come to trust the credit scoring systems the credit bureaus have developed, they only need to set a threshold credit score number above which their computer will automatically approve credit for the sale. The computer will decline the sale if the credit score is below the threshold.
Lenders who have automated the credit approval system never need to see the actual credit report. These lenders tend to be companies who have a high volume of transactions with a lower average dollar value per sale.
Some lenders choose to set the computer to refer the marginal scores for review by their credit department. Their credit department staff will look at your credit report in those few cases and adjudicate an approval or rejection.
Another situation that warrants a look at your credit report by credit staff will be in the case of the purchase of higher priced items such as a house, automobile or major appliance. These purchase usually involve payments over longer periods. The credit department will be prudent by looking at more than just your credit score to determine of the contract.
Credit bureaus are companies that are in business to make money for their shareholders. Their revenue comes from selling memberships to lender who want to access credit reports of companies and individuals. These members pay for each report they access. The credit bureaus also earn revenue by selling trend information such as consumer buying patterns to companies who want that information for marketing purposes. For example, Ford might want to know how many cars were financed with credit last year so that they can know where they fit in the overall automobile market.
The members are buying information about consumers, like you. A critical point to understand is that the credit bureau members are the paying customers. The general public are not the credit bureaus customers. Another way to think of it is that information about you is the inventory which credit bureaus sell to their customers, the members.
Although consumers are the source of the information that makes up the credit files, only what members report about consumers is put in the credit report. The only other sources the credit bureaus use are government public records.
