Mandatory Reports to a Credit Agency

With credit scores playing such an important part in our lives, many people are worried about what is being said about them on their credit reports. While it's easier than ever to obtain a copy of your credit report, it helps to understand what the credit bureaus require creditors to report about your credit activity.

Credit Reporting Requirements

According to the Privacy Rights Clearinghouse, the Fair Credit Reporting Act does not require creditors to report anything to the credit bureaus, including negative information. This can work against you if you run into hard times, but it helps to build your credit history if you're making payments on time and the credit bureaus are notified of your good credit management. However, most companies do choose to report information about you to the three main credit bureaus: Experian, Equifax and TransUnion.

Credit Limits

Since most creditors choose to report information about their customers, legislation has been enacted to ensure that the information reported is accurate. Among the items included in this legislation is a rule stating that creditors must report your credit limit in conjunction with anything else they report. This helps to give your credit profile some perspective; a low balance doesn't help your credit score much unless your credit report shows that it's a small part of the card's limit. The credit limit plays into calculating your overall debt in relation to your available credit, a ratio that comprises 30 percent of your credit score.

Payment History

Though not required, most companies will report information about your payment history. Since this is the biggest factor in creating your credit score, it's a critical part of your overall credit profile. Late payments aren't reported unless they're at least 30 days past due; some companies choose not to report your lateness unless you're 60 days past due. You can help your own cause by paying on time each month and avoiding the possibility of being reported.

Credit Report Disputes

Because credit companies are not required to report anything to credit bureaus, it's surprising that errors on credit reports are so prevalent. A 2004 report stated that nearly 80 percent of credit reports contained errors. Of this number, 25 percent contained errors that would sway a decision on one's credit worthiness. Fortunately, you can dispute anything on your credit report that you may not think is accurate; better yet, you can usually file disputes online. If an item is removed from your report, you'll receive an updated copy of the report with the negative item removed.