Life Cycles of Credit Reports and Credit Scores
Written by Yun Yang   


Your credit reports and credit scores can affect every aspect of your life. You are probably very curious about how they are produced, and who produce them. The following figure may give you a comprehensive view of their life cycles and help you better understand their inner-working system.


Credit Reporting Bureaus

Your personal information and credit history make up your credit reports. Credit reports are typically produced by three major credit reporting bureaus: Experian, TransUnion, and Equifax. These three credit bureaus are regulated by the Fair Credit Reporting Act (FCRA).


Credit Scoring Systems

Based on your credit history, the credit score is generated through certain mathematical algorithms. The most prominent is the FICO Score, developed by Farr Isaac. It is a three-digit number determined by a complex set of factors to reflect your creditworthiness.

In addition to FICO score, the credit bureaus all have their own credit scores: Equifax's ScorePower, Experian's PLUS score, and TransUnion's credit score.  Each credit bureau also sells the VantageScore credit score which is an attempt to compete with the FICO score. Many large lenders, including banks, have also developed their own proprietary scoring models.


Data Furnishers

Companies and agencies that report the debt or payment information to credit bureaus are called data furnishers, or information providers. Most common data furnishers are creditors and lenders, such as banks that provide your credit cards, auto loans and mortgage loans. More over, data furnishers can also include utility companies, debt collection agencies and courts, etc.


Oversight Agencies

Two government agencies oversee credit bureaus and data furnishers. The Federal Trade Commission (FTC) regulates the consumer credit bureaus. The Office of the Comptroller of the Currency (OCC) supervises all national banks with regard to the data they furnish credit bureaus.
Last Updated on Wednesday, 16 February 2011 14:01