How is the information in a Credit Report compiled?

You have knowledge about the credit report and what it contains, you might wonder where all this information comes from, and how the information in the credit report is complied. We are now going to explain the answers for the above questions. The details primarily come from lenders, creditors and collection agencies. Every month lenders, creditors and collection agencies will report details about you to one, two or all the four bureaus/credit reporting agencies. It is mandatory for Credit Institutions (banks) to be a member of any one bureau as per The Credit Information Companies (Regulation) Act, 2005. Once the Credit Bureau gets data from lending institutions, your credit report and credit score will then be updated. Although it is possible that no new information will be added during any given month, which means you need to bring it to the attention of the credit bureau and banks, in case there is any change. In general, your credit report is updated frequently, as new information is reported by the lenders. However, it’s important to also keep in mind that most lenders report changes in account status, such as payments you have made or if you have fallen behind, on a monthly basis. If you make a payment in one of your accounts, it is possible that the payment won’t appear on your credit report for up to 30 days. You may have a question– why do lending institutions have to be a member of the credit bureau? The answer is very simple, protection. Banks and other financial institutions share information to protect themselves from debtors who won’t pay as promised. Lenders rely upon credit reports and scores to help them predict the risk of doing business with new credit applicants. The more complete and accurate credit reports become, the better they are at helping lenders predict credit risk.

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