There are three major credit reporting agencies, and they compile histories about consumers. The three agencies are: Experian, Equifax Information Services, and Trans Union Corporation. They know whether or not you pay your bills on time, they know whenever you apply for a credit card, regardless of whether or not you actually get the card.

The three majors know where you live, where you work and how much money you make. If there are any liens, bankruptcies, foreclosures, defaults, or judgments, they know about that, too. In short, like Santa Claus, they know when you’ve been naughty or nice.

These credit reporting agencies sell this information to companies you want to do business with. When you apply for a mortgage, the lender will typically get a credit report from all three agencies, so if any one agency may have missed catching you in a late payment, chances are, one of the other agencies have it on record.

The credit reporting agencies only provide the data, they don’t make the decisions. Rather, that responsibility is deferred to the lender.

There are some guidelines that these agencies, and the companies that subscribe to their services, must follow. It’s called the Fair Credit Reporting Act. Under this act, any company wanting to acquire your credit file must have your consent. The company is prohibited from selling the information they acquired about you.

The credit reporting agencies themselves, however, are allowed to sell lists to banks and credit card companies for the purpose of solicitation. If you apply for credit and are denied, you have the right to see a copy of the credit bureau report within 60 days.

With so much personal information contained in this file, it’s definitely worthwhile to pay the small fee to obtain a copy of your credit report periodically to ensure that there are no mistakes.