What You Need To Know About Credit Score Agencies

For all intents and purposes, there are three credit reporting agencies in the United States. They are worth noting because they calculate the all-important credit score. These credit score agencies are:  there are three major credit score agencies, or credit reporting agencies; they are Equifax, TransUnion and Experian. They are mostly responsible for gathering financial information on virtually everybody in the US, and will provide their findings to those parties that make a legitimate request for it.

Just so you know, it's not only banks or car dealers that can get access to your credit information. Others that can get it are utility companies, insurance agents, landlords and potential employers, to name but a few. In fact, many of them now rely on the data provided by the credit score agencies to get an idea of an individual's credit risk.

Furthermore, your credit score has a direct impact not only on how high or low your loan interest rates will be, but also on whether or not you can get the loan at all. In this respect, the same is true for credit cards as it is for loans.


Because the credit agencies play such a major role in your financial well-being, it's vital that you do not engage in the behavior that can be detrimental to your credit. It's just as vital that you get copies of each of your credit reports and check for any mistakes; being sure to report and amend any and all inaccuracies you may find.

The logical question then becomes what kind of things reduce your score? Not making payments on time (utility bills and loans), not enough income to cover too much debt. The amount of debt you have as compared to your total income is your debt-to-income ratio, and should be no higher than about 37% (a lower ratio is even better). A higher ratio, even if you are making all the payments, spells too much  risk in the eyes of most lenders.

But that's not all. There are other financial behaviors that credit score agencies tend to frown upon. Too much activity on an account in a short amount of time is one such red flag. Another is getting lots of requests for your credit report in a short time. This gives the appearance that you are shopping for credit, and, by their reasoning, running up more debt than you can repay. The one exception to this rule is if you request to see your report; this should never reflect poorly on your credit score.

Finally, you should know that each of the three credit reporting agencies may generate a slightly different credit score for you. This s because different creditors report to different agencies. Some will report to all three, but because not every creditor does this, bigger lenders will average the three different scores to get a more accurate idea of what your actual number is. It may seem like a bit of hassle to check your reports, but credit score agencies do make mistakes, and it's your money and lifestyle that are at stake.