How Creditors have access to your credit card information

When you ask a lender for a loan or an overdraft facility, he will get a written credit report from one or several of the leading credit accounting authorities or organizations. The result of their summary report largely will determine whether you get the loan or not. So how does the process work? 

If you live in the U.S. and has never applied for a loan and was approved, you have been assigned a rating of one or more of the many credit reporting agencies. What is a credit? It is a written record of the loan you received with your repayment history of these loans. Have you been late on your payments? Forgotten payments? Have you defaulted on the loan? All these acts will show up on your report. 

But it's not all. Every time you fill a loan application and the prospective lender shall ask of your creditworthiness to any of the Credit Reporting Agencies, it will be registered as an "investigation" in their report. What you will find here is the name and request date for all who have asked to see a copy of your credit report for the last few years. The credit inquiry box can also display the names of creditors that you have not even requested credit from, such as credit card companies have checked your credit score to decide whether you are a prospect of one of their campaigns. 

You may be shocked to discover how urgent your credit report actually is. It will contain all kinds of very personal facts about you. Facts such as your Social Security number, your birth date, a list of your current and previous employers, current and past home addresses, etc. If you have any outstanding loans, the report will also list information such as date the loan was used for the type of loan, loan, repayment history and whether the account is still open. 

If you have any loans that have been handed over to a collection agency, these loans are also listed. If you have any judgments against you or property liens outstanding, these will be shown as well. 

A creditor must subscribe to one of the credit bureaus to have access to this information. There are three major reporting agencies to contact lenders for credit information - Equifax, Experian and Trans Union. The relationship is a two way street. These agencies provide credit information to various lenders. The lenders, in turn, updated customer transactional information back to the credit bureaus. So each time you make a payment on time, or alternatively miss a payment, the lender will disclose this information to credit bureaus. 

Based on the information in your file, the credit institution rate you and assigns a score to you with an indication of your creditworthiness. To varying degrees, many lenders base all or part of their decision to approve the loan based on that score. 

But as many have discovered to their chagrin, the information that credit bureaus keep is not always correct. For example, if for any reason, the creditor has committed an error in the information they send to the credit bureau will your record have incorrect data. This is how millions of pieces of false information ends up in credit databases and the main reason why everyone should request a copy of their credit report from each agency at least once a year.