How does credit reporting work?

The three nationwide credit bureaus (Equifax, TransUnion and Experian) are important parts of our credit-based economy. Credit bureaus (also known as credit reporting agencies or CRAs) do not determine whether you qualify for a loan or at what rate. Credit bureaus collect and maintain a timely history of your credit activity as reported by the lenders and creditors with whom you have accounts, along with certain other information such as bankruptcies and collection items. Each creditor may report the status of your account according to your payment history. Not all lenders and creditors report to all three nationwide credit bureaus -- some may report to two, one or none at all. 

Financial institutions and others with a permissible purpose can obtain a copy of your credit report in order to make certain types of decisions about you. For example, when you apply for a new loan or credit card, a lender may use the information in your credit report as well as their own criteria to determine whether to lend you money and at what rate.