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Credit in the USA

The Importance of Having Good Credit in the U.S.A.

The issue of credit in the United States of America is by all means a very important one. Many aspects of your financial life will be hinged on your credit score and credit history and maintaining good credit in the United States is key if you want to be successful.

Credit in the United States of America is monitored by three major credit agencies or bureaus. These are Equifax, Experian and TransUnion. All three have their unique method of scoring credit histories and therefore may not have the exact same information about the same person.

Equifax has been in operation for over 100 years. The company is based in Atlanta, Georgia, but has offices all over the world. This credit agency caters to both small and large companies and also assists individuals with credit reporting as well. As with the other agencies, Equifax tries to ensure accurate credit reporting, and in cases where there are errors, it does try to promptly rectify them.

Experian's focus is on providing business services to interested companies. Experian is paid by companies who are seeking creditworthy leads for direct mailing or preapproved offers. For example, when consumers receive preapproved credit card offers in the mail there is a good chance that the original information regarding the consumer's creditworthiness was supplied to the creditor by Experian or one of the other credit bureaus. Experian also offers ContractorCheck, a service that individuals may use to check a contractor'¬ôs licensing, credit and other important information, before employing he or she. TransUnion, the other credit bureau, began operations in 1968 and is based in Chicago, Illinois. TransUnion maintains credit reports for millions of consumers including overseas consumers who do not live in the United States. This company provides a variety of educational materials to consumers with information on credit management and other financial issues. TransUnion's Credit Learning Center supplies consumers with answers to common credit questions as well as other useful information.

These bureaus are not designed with the consumer in mind, rather they operate to the advantage of the companies requesting credit scores. The main focus of credit bureaus is to provide accurate information to the companies requesting histories of credit applicants.

These agencies operate for profits and are companies owned by their shareholders. They are not government entities nor are they funded by the government. The 3 national credit reporting agencies are competitors of each other, and they do not normally share their credit information except in special cases. Credit agencies or bureaus gather their consumer credit information by encouraging creditors such as credit card companies, banks, and lenders to join their systems and contribute their credit experience on consumers to the systems. In return for this, creditor members may obtain credit information on consumers to approve credit decisions or review existing consumer accounts.

Credit agencies are generally regulated by the Fair Credit Reporting Act (FCRA), which is the Federal law governing consumer reporting agencies including credit reporting in the United States. Individual states may also have their own versions of the law.

Under Federal law credit reporting companies known as CRAs (consumer reporting agencies) have numerous responsibilities to protect consumers and their credit information.

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