How does info get on a credit report?

If you're reading this, then you're probably curious about how information gets into your credit report. How does your payment history and public records end up in a credit report? How does it translate into a credit rating?

How is information reported to the consumer reporting agency?

Your repayment history is the single most important factor in determining a credit score. This information is transmitted electronically from your bank, credit union, or finance companies, through the data processing system that the institution tracks your account with.

There is a system of codes that is used to universally transmit and decipher the information about your repayment history. These codes are referred to as the Metro II codes. These codes ensure that all lenders report information in a consistent manner. In addition to providing the status of the account (current, past due, delinquent) it also provides for reporting of the ECOA Codes (joint account, single account), Compliance Condition Codes (bankruptcy, legal, etc.), and, Consumer Information Indicators (account disputed, etc.).

As payments are received and posted to the financial institutions data processor, the payment due date is advanced and the status is updated to current, or past due, delinquent, etc. Note that past due is not the same as delinquent. 'Past due' or late payments will not show up on a credit report unless or until they are at least 30 days past due. Some financial institutions will not report late payments until you are 60 days past due.

After the payments are posted and the financial institutions data is updated, the information is sent to the credit repositories, primarily to Equifax, Trans Union, andor Experian. This data is transmitted electronically in Metro II format on a regular, usually monthly, basis.

How do public records get reported to the consumer reporting agency?

Before we talk about how a public record gets reported, let's first define what a public record is. Simply put, a public record is any information about you that is available to the public. For example, property transfers are public record. The status of your real estate tax bill is public record. Whether or not you have filed for bankruptcy is public record. Wage garnishments are handled through the sheriffs department and are public record. If you are party to a lawsuit, etc. All of this information is available in the public records area in your county clerks office.

There are those that visit the county offices, known as abstactors (one who gather and summarizes information), who gather this information and provide it to the credit reporting agencies.

The credit repositories then take this information and sell it to others in the form of a credit report. This credit report is used to determine any number of things. Employers use this information when considering you as a candidate for employment, obviously lenders use the data to determine your credit worthiness, and, insurance companies use the information to determine your eligibility and to price your premiums.

Sometimes the information that a lender reports is wrong. For example, you made your loan payment through the mail but is was mistakenly posted to another persons account. Maybe your account numbers are very similar and the person that posted the payment made a data entry mistake.

Other times, the public records are incomplete or inaccurate. If you have a common sir-name (Baker is very common in our area) information about another person with the same or a name very similar to yours may be picked up by the abstractor and reported on your credit report.

How does my new address and employer get reported to the CRA's?

Each time you apply for a loan or request credit, you're usually required to provide some personal information like your social security number, your date of birth, your address, and, your employer. The finance company or lender enters this data into its loan origination system usually before they order a credit report. When they order the credit report, the information that you provided is transmitted to the CRA that they are ordering the report from.

Here are a couple of other resources that I hope you find helpful.

How Credit Reports Work

Your Credit Report Brochure from the FRB of San Fransisco

Whats in your credit report from myFICO.com