Trans World Assurance Blog

How the Credit System Works (Jeff Burch, Money Book)

Posted on Tue, Mar 22, 2011


The largest and foremost Credit Reporting Agencies (CRA’s) are Equifax, Experian, and TransUnion. They are the main companies that collect, compile, and store information on individual consumers that allows them to produce a credit score. It is estimated that these agencies have credit information on almost 200 million Americans.

The CRA’s are constantly in contact with banks, credit unions, finance companies, and other lenders who continually update them on the status of an individual’s account. This allows them to track the payment status and balances of your credit cards, auto loans, and mortgages. In addition, the CRA’s hire teams of professionals to inspect court records to track down bankruptcy information, civil judgments, or tax liens.

After collecting and compiling the data, the CRA then applies a formula to determine each individual’s credit score.

What can hurt and lower your credit score?

  • Late payments 
  • Having a high amount of debt or credit 
  • All derogatory information in your file

Most negative information will stay on your credit report for seven years, but Bankruptcy is held in your file for ten years.



The federal Fair Credit Reporting Act requires each of the major credit reporting bureaus to provide consumers with a free copy of their credit report, once every 12 months.

To order your free report, go through or call 877-322-8228 (toll free).

If you space your free reports correctly you can get one every 4 months.


  • March report from EXPERIAN 
  • July report from TRANSUNION 
  • November from EQUIFAX

Although your free credit report will allow you to check your credit report for errors, it will not tell you your credit score. To acquire your score, each CCR maintains a website on which they sell credit reports that contain your score.  

Equifax: (800) 685-1111 -  
Experian: (888) 397-3742 -  
TransUnion: (800) 888-4213 -


This series of articles from the Money Book by Jeff Burch will continue tomorrow with an article titled Vantage Score and FICO.

Tags: Trans World Assurance, military, Money Book, Jeff Burch, establish credit, credit history