Information reported to the three credit agencies, or bureaus – Equifax, Experian and TransUnion – includes credit card utilization, debt repayment, payment history and other information.
There is no standardized date or time when credit lenders uniformly report information to the bureaus.
While government organizations don’t report to the bureaus, lenders and reporting agencies purchase public documents such as bankruptcy and tax filings.
Credit card companies, installment loan providers, financial institutions and other companies report your financial information to the three major credit bureaus.
Although the type of information provided by these companies is relatively standardized, lenders ultimately choose what data they report and to which agencies. Companies report information on people to credit agencies when they make timely payments, late payments, new account requests and more.
Nevertheless, you must keep aware of your credit reports so that you can correct any incorrect information and have the knowledge necessary to make significant financial decisions.
How does credit reporting work?
The three credit reporting agencies compile information about your credit history, and then each derive a credit score on a scale of 300 to 850. This provides a representation of your creditworthiness to future lenders.
Your credit score plays an integral role in determining your financial ability to obtain more revolving credit in the form of credit cards, or installment loans such as personal or business loans, a mortgage necessary to buy your first home, or financing for a new car.
Information in credit reports is used to determine your credit scores. A credit report is comprised of your credit history and future obligations. It includes information such as:
Total amount of credit card debt
Number of on-time and late payments
Installment loan accounts
Student loan debt
Auto loan history
In addition, lenders will also report significant events, such as the payoff of a large loan or an increase in your overall credit limit.
Certain financial events involving the government are not reported to the bureaus by the government itself. For example, you must file in your local federal court to declare bankruptcy; the local federal court would report the event to the credit reporting agencies. Similarly, the Internal Revenue Service (IRS) or state tax collector will file a tax lien in court; those organizations will report those events.
But the government itself will neither report the bankruptcy nor tax lien. Instead, these documents become public records that credit reporting agencies purchase and include in your credit report.
Now that you know what is reported, when is it reported?
When do lenders report financial information?
Although credit scores and reports play such an immense role in your financial health, lenders are not required by law to report any information to the bureaus. But for the information that is reported, the bureaus charge a fee.
Therefore, lenders choose to which bureau(s) they report information. That’s why your credit score as generated by TransUnion, for example, may be slightly different than the score generated by Equifax. The onus to review credit reports for accuracy is on you.
1. Lenders report on the closing date of the billing cycle
Generally, lenders such as credit card companies report balances and payments every month. Others report every quarter.
This means that you may improve your score by paying down your balances before the given cycle closes.
2. Companies report missed payments to credit agencies
When your credit card or loan payment is due, companies sometimes will give a one to three-day grace period. Some card issuers will even prompt you to pay with reminders through notifications on your smartphone.
Scheduling automatic payments can prevent a simple mistake from drastically affecting your creditworthiness. The lender will report a missed payment if no payment has been received following the allotted grace period. The report can have dramatic effects even for a missed payment of a small dollar amount.
Late or missed payments remain on your credit report for seven years. This information is available to future lenders and can have a significant impact on your credit score. After the seven-year period ends, the negative mark is automatically removed.
3. Check your credit report for errors
Even though the information companies report to the bureaus plays an essential role in your life, that information is not always correct. Luckily, you can dispute items on your credit report if you spot errors.
Federal law requires that the three credit agencies provide consumers with one free copy of their credit report every year. You should take advantage of this right and review your reports from each agency.
If you find an error, you have the right to dispute it by filing with the credit agency. This triggers a 45-day window within which the agency must investigate your claim and file a response.
Monitor your credit health
Before making a large purchase such as a home or car, familiarize yourself with your credit reports. Companies will report you to credit agencies for negative marks, but they also report on a wide range of other information.
If you plan to apply for a mortgage or other financing in the near future, be sure to review your reports and make sure all information is accurate. This will, in turn, make sure that your credit scores are based on correct data.
Unlock Technologies considers credit history when providing funds
Maintaining your credit health is one step on the path toward homeownership. Even after you secure a mortgage and purchase a home, there may come a time when you need to access more liquid funds. That’s where Unlock Technologies steps in.
Once homeowners establish equity in their homes, we provide a method of tapping into that equity. While credit history is one factors considered, it’s not the only factor by far. With a minimum FICO requirement in the 500s, an Unlock Technologies home equity agreement may be more accessible than other options.
We provide cash in exchange for a percentage of your home’s future value.
Contact us today to learn more.
The blogarticles published by Unlock Technologies are available for informational purposes only and not considered legal or financial advice on any subject matter. The blogs should not be used as a substitute for legal or financial advice from a licensed attorney or finance professional. Links in our blogs to third-party websites are provided as a convenience and for informational purposes only; they do not constitute an endorsement of any products, services, or opinions of the corporation, organization, or individual. Unlock bears no responsibility for the accuracy, legality, or content of the external site or for that of subsequent links.
The blog articles published by Unlock Technologies are available for informational purposes only and not considered legal or financial advice on any subject matter. The blogs should not be used as a substitute for legal or financial advice from a licensed attorney or financial professional. Links in our blog posts to third-party websites are provided as a convenience and are for informational purposes only; they do not constitute an endorsement of any products, services or opinions of the corporation, organization or individual. Unlock Technologies bears no responsibility for the accuracy, legality, or content of external sites or that of subsequent links.