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Where do Credit Reports Come From?

Jan 30th, 2007 16:21
Ivan Rimsky, Poul Halds, http://www.halds.com/, http://www.cardfusion.com

Where do credit reports come from?
Not from a stork, of course. Credit reporting agencies or CRAs for 
short and credit bureaus collect and process credit information of 
individuals for a living. They sell these to financial institutions 
and other related businesses whose day-to-day operations require them 
to know if their clients are of good credit standing…or a risk not 
worth taking. And so they perform a credit check by requesting said 
information from the companies cited above.
Credit reporting agencies collect and verify personal financial 
information from financial institutions, such as banks, loan issuers, 
credit card providers and others,  with which they are associated as 
business partners.  Each main credit bureau has its own pool of 
organizations that supply it with the information.  The data sources 
may often overlap, although some of them are unique suppliers to just 
a single CRA.  Besides diversified data channels credit bureaus apply 
different algorithms for the purpose of credit assessment and credit 
scoring.  Taking into consideration the differences in inputs and 
calculating processes one can expect the results to be slightly 
different, as well.  That is why we observe some deviations of credit 
scores in cross-agency reports.
more to come...