Credit reporting agencies can have a profound effect on a consumer's ability to borrow money, get insurance, or get a new job. It's well-known that agencies provide information on a person's credit history to potential lenders, employers, and insurers, but that is not the only way these companies make money. Credit reporting agencies actually have several sources of income.
Definition
Credit reporting agencies are agencies that compile consumer information. This typically includes demographics, employer information, payment history on credit cards and loans, and information on debt-related civil judgments.
Types
There are three major credit reporting agencies in the United States. These companies are Transunion, Equifax, and Experian.
Function
Credit reporting agencies compile information about consumer credit histories. The information is sold to potential creditors, landlords, insurers, and employers.
Additional Methods
Credit reporting agencies also make money by selling information to solicitors who use it to send offers to consumers. This can be stopped by visiting the official opt-out website.
Warning
Credit reporting agencies must provide consumers with a free copy of their credit report every year upon request. The agencies often try to make money by trying to convince consumers to buy other services, such as credit monitoring, when they request their free report.
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