When a business has credit information on a client that needs changing, they contact the three credit reporting agencies. . The three credit reporting agencies--Experian, TransUnion and Equifax--monitor information both good and bad, depending on the action of the customer and what the business does in response.
Normally, hearing about the three credit reporting agencies is enough to make a consumer nervous, as it can mean bad things for their credit if something is placed on their credit record. Credit bureau reporting can, legally, take place for just about anything, though many companies do not go through the trouble of reporting an issue unless it is a serious matter. Credit card companies, for instance, can alert the three credit reporting agencies if a customer does not make a credit card payment before the deadline. Other companies, like the power or gas companies, can also take part in the credit reporting process if payments are not received, or if the power or cable or other utility is cut off and has to be reconnected.
A severe blow to a consumer’s credit comes if a mortgage or car financing company gets involved with the three credit reporting agencies. Though they normally wait 60 days (or two missed payments) to report delinquencies, any negative reporting on these major matters can be a severe blow to someone’s credit score. A foreclosure on a house or a reposed car can be devastating to a consumer’s credit and take many years to recover from. Defaulting on any other kind of loan can have just as devastating an effect to an individual’s credit.
Not all credit bureau reporting, however, is negative. If a credit card company increases your credit limit as a tribute to your timely and complete payments, that will be reported to the three credit reporting agencies. Paying off loans on time, or ahead of time, is also duly noted. If an individual pays off their home or car, these actions are also reported to the credit bureaus and lead to a huge boost in an individual’s overall credit score. Just as negative credit bureau reporting can have painfully negative consequences, positive credit bureau reporting can bring benefits for many years to come.