Credit reporting is the process that credit reporting agencies, also called credit bureaus, use to inform banks and other businesses about your payment and spending habits via yourcredit report. Your credit report is maintained by companies known as credit reporting agencies or credit bureaus. There are three major credit reporting agencies in the United States – Equifax, Experian, and TransUnion.

Periodically, the companies you do business with send updates to the credit reporting agencies to let them know how you’re doing on your financial obligations. For example, your credit card issuer will update your account to include your account balance, credit limit, monthly payment, recent payment history, and current status of your account.

The Importance of Credit Reporting

Credit reporting is important because other businesses use your credit report to make decisions about you. If you apply for a credit card or loan, the bank will check your credit report to see if you’ve been doing well with your other credit cards and loans. They use this information to determine whether they’d like to give you a credit card or loan, how much they should loan to you, and the interest rate you should be charged.

Credit Reporting Rules

There’s a Federal law – the Fair Credit Reporting Act – that’s in place to make sure all companies involved with credit reporting do the right thing. Both the businesses that provide the information and the credit bureaus are responsible for making sure your credit report has accurate and complete information. If you find something that’s wrong on your credit report, you can bring it to their attention using a credit report dispute and have your credit report updated.

You can check your credit report to see how good a job these companies are doing at credit reporting. Free credit reports are available once a year through