Credit reporting agencies are set up to gather financial facts and present them in an organized fashion. They collect information from various banks, mortgage companies, department stores and other creditors about credit accounts and compile it into a credit report for all the working population. This report is used largely to determine further lending and rates on interests on loans/credit cards. The credit agencies do not make any lending decisions themselves. They just give preliminary data based on which the financial agencies like banks, credit unions take decisions.
This phenomena of using Credit Bureaus is not new in America and has been there since 1830’s.This phenomena has however come to Asia recently only. This is the reason Credit Rating System in USA is so very well developed and sophisticated.
In USA there are three main credit agencies:
