Are Lenders Required to Report to Credit Bureaus? The Surprising Truth.

Lenders and other institutions turn to our consumer credit reports to determine if they want to work with us. These reports contain essential information about our financial lives. But how does that information get there – and how accurate is it, anyway? 

Are lenders required to report to credit bureaus? Surprisingly, they’re not. This article takes a closer look at the ins and outs of credit reporting. 

How does credit reporting work?

Our consumer credit reports don’t populate themselves automatically. Banks, credit card issuers, and other financial institutions voluntarily report consumer data to the three national credit bureaus (Equifax®, Transunion®, and Experian®). 

Everything you find on your credit report comes from these reporting agencies. This includes past and current accounts, repayment histories, account balances, credit inquiries, and personal data like your address and social security number. 

The credit bureaus compile this data into a comprehensive credit report, which they update as new information is reported to them. 

Who reports to the national credit bureaus?

Many lending institutions report to the national credit bureaus. Banks and credit card issuers, for example, commonly share information about revolving lines of credit (like credit cards) and installment loans (like auto or home loans). Lenders are not required to report to credit bureaus: all the information on your credit report is provided voluntarily.

Companies like utility providers, child support agencies, and healthcare providers generally don’t report to the credit bureaus – unless you fall behind. In these cases, the unpaid account can wind up on your credit report. 

If a lender or other institution determines you’re unlikely to pay your debt, they may sell it to a collections agency. These agencies generally report the negative account to the credit bureaus, and can continue to do so for up to seven years. 

Do all lenders report to all credit bureaus?

Most major financial institutions report to all three credit bureaus. The reporting process takes time and money, however, so some smaller lenders may only report to one or two. Some lenders - particularly predatory payday loan providers - don’t report at all. 

As a result, your credit report (and credit score) can vary from bureau to bureau. This means lenders may perceive your borrowing habits differently depending on which report they pull. 

Are lenders required to report to credit bureaus?

Lenders are not legally required to report to the national credit bureaus. Lenders report consumer information voluntarily, because it’s to their benefit. Credit reporting helps lenders accurately assess potential borrowers and encourages responsible credit use by consumers. 

Payday loan companies and other predatory lenders generally do not report responsible repayment activity, which hinders borrowers from building positive credit history. This disproportionately impacts poor and minority folks, who are often systematically locked out of reputable credit opportunities. 

When lenders do report to the credit bureaus, the information they provide must be accurate and complete. Consumers can dispute erroneous or incomplete information; and lenders are legally obligated to investigate their claims in a timely manner. 

Credit reporting errors are more common than you think 

More than one-third of US consumers have an error on their credit report. These inaccuracies can range from misspelled names, to inaccurate repayment information, to entire lines of credit  they never opened. 

At best, errors on your credit report can be a headache. At worst, they can prevent you from qualifying for credit offers you would otherwise – and even cost you employment or housing opportunities. That’s why it’s important to regularly confirm your credit reports accurately reflect your borrowing history. 

How to prevent errors on your credit report

Because reporting errors are relatively common, it’s wise to regularly review the information on each of your consumer credit reports. Consumers are legally entitled to a free credit report from each of the national credit bureaus every 12 months: request yours at freecreditreport.com. Remember, you should never have to pay for a credit report as long as you haven't already requested a free report within the year.

If you find a mistake or omission on your credit report, you can file a dispute directly with the credit bureau. If the dispute is deemed valid, the information will be updated or removed. Your credit score may improve as a result. 

StellarFi removes unnecessary barriers to credit building

Millions of Americans pay their bills on time, but their responsible financial behavior never gets reported to the credit bureaus. If our bill payments were reported like loan payments, millions more creditworthy consumers would have great credit.

To make matters even more challenging, traditional credit-building methods require consumers to take on additional debt or pay for a secured card, until now. 

With StellarFi, you can turn your monthly expenses into credit builders. Simply sign up and link recurring payments like your rent, car insurance, and even your DoorDash subscription. You pay your bills every month – you should get credit for it. 

Signing up is easy, and there’s no credit check. Become a StellarFi member today and unlock the perks of Stellar credit. 

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