- Data furnishing is the process of sharing consumer information with the major credit bureaus.
- Since data furnishing isn't required, your credit reports may not reflect all borrowing activity.
- Credit reporting errors are common, so it's wise to check your reports regularly.
Introduction to data furnishers
What is a data furnisher?
A credit data furnisher is an institution that reports consumer credit information to one or more of the major credit bureaus. In other words, your credit reports don't populate themselves. The lenders you borrow from send your account activity to the credit bureaus, and then they update your reports accordingly.
Common examples of data furnishers
Although there are only three major credit bureaus, there are thousands of data furnishers. Traditional banks, credit unions, online lenders, debt collectors, and auto loan providers are some of the data furnishers. Any institution that gives out loans or credit and provides that information to credit bureaus is a data furnisher.
Why data furnishers are essential to credit reports
Furnishers play an integral role in the U.S. credit system by sharing consumer data. But what kinds of information do credit furnishers provide to the bureaus? Everything you'd find in a credit report.
Furnishers share account information, including credit inquiries and total credit availability, which are key components of your credit score. They also provide account activity like outstanding balances and payment history. For instance, if you miss payments, lenders can share this with the credit bureaus, and your scores would likely take a hit. They also share your name, address, Social Security number, and other personal information so your activity can be connected to your identity.
How data furnishers report information
Types of information provided by data furnishers
Data furnishers provide information about new loans or lines of credit that a consumer borrows, but it doesn't stop there. All of your payment history, including late payments, gets reported to the major credit bureaus.
They also provide account information and let the credit bureaus know how much credit you have available. Your remaining credit is a key component of your FICO score since this figure and your total balance determine your credit utilization ratio.
The frequency and timeliness of data furnishing
It's standard practice for companies to furnish data and report to the major credit bureaus every month. Some companies furnish and report every 30-45 days. This time frame allows lenders to update the credit bureaus about your payment history and account details every month.
Standards and regulations for data furnishing
While lenders and other institutions are not legally required to furnish credit data, when they choose to do so they have to follow regulations established in the Fair Credit Reporting Act (FCRA).
Generally speaking, there are two overarching rules that a credit data furnisher must abide by under the FCRA:
- The information must be accurate and complete.
- Consumers must be able to dispute the information — and, if they do, the furnisher must be able to thoroughly investigate the dispute.
As a result, data furnishers must have strict internal policies and controls to ensure accuracy and enable consumers to dispute their data. For example, if you were to dispute a misstated balance on your report, the furnisher is legally obligated to investigate your claim.
So, if furnishing isn't required, why do institutions do it?
"Furnishing is good for everyone, in terms of both credit risk and the cost of credit," said Christian Widhalm, chief executive officer of Bloom Credit, an API platform that enables businesses to integrate with credit bureaus. "The more information that's out there, the more accurately a lender can price risk — so lenders should have fewer losses and consumers with good credit should get lower rates."
Furnishment also encourages responsible financial behavior. Borrowers who routinely make payments on time are rewarded for their efforts — their credit reports update to show their good habits, which should improve their credit scores. Conversely, borrowers who miss payments will hurt their scores, making it more difficult to access credit in the future.
Impact of data furnishers on your credit report and score
How accurate data furnishing affects credit score
Accurate data furnishing can significantly boost your credit score in the long run, if you make on-time payments. That development would help you qualify for more financing at lower rates in the future.
For example, let's assume you open a credit card account with a major financial institution. You use your card for purchases, make timely payments, and pay off your previous statement balance each month. Once your lender shares, or "furnishes," your data to the credit bureaus — which is usually every 30 to 45 days — your credit reports will update to reflect your payment activity.
Credit-scoring systems, such as FICO Score and VantageScore, run this data through their models to generate credit scores. These are three-digit numbers that represent a borrower's likelihood of default in the next 24 months. As people borrow and repay debt (or don't), they create a feedback loop of credit data that lenders use to evaluate applications and issue new loans.
The role of data furnishers in dispute resolution
Furnishers can input the wrong data and present an inaccurate portrayal of your credit accounts to the major credit bureaus. If you spot any errors on your credit report, you can dispute the errors, which then requires data furnishers to take action.
After receiving a customer's notice about credit report errors, the data furnisher must investigate the matter within 30 days. Afterward, the data furnisher must adjust the errors or explain to the consumer why the credit report will remain the same. Data furnishers are legally required to clarify their decision.
How to ensure accuracy with data furnishers
Steps to verify data furnisher information on your credit report
Checking each of your credit reports is the only way to ensure your credit data is accurate. This may seem like an unnecessary chore, but it's wise to regularly monitor what's shared with the bureaus. If you find a mistake, you can dispute it and potentially improve your credit score.
Each major credit bureau – Experian, Equifax, and TransUnion – can give you a free copy of your credit report every week. You can skim the credit report and see if everything is accurate, including account balances and payment history.
If everything's correct, there's nothing else that you have to do. However, you should file a dispute if you see errors on your credit report.
What to do if you spot an error from a data furnisher
Errors happen, but you have the right to dispute them. Gather any supporting documents when filing a dispute. You have to send your letter of dispute to the credit bureau which has errors on your report.
Experian, Equifax, and TransUnion all have instructions on their site that detail how to submit a dispute. You can call, email, or mail them your dispute letter. Then, the credit bureau will contact the data furnisher and have them run an investigation.
"Lenders are not required to furnish consumer credit data," shared Widhalm. "But if they do, there's a registration and setup process for each credit bureau, which takes both time and money, causing some lenders to furnish data to only a single credit bureau."
This can create discrepancies between credit reports and, therefore, credit scores. If your lender only works with one credit bureau, your reports from the other two won't register your credit activity.
"You may have a 760 on Equifax and TransUnion, but only a 710 on Experian." Widhalm says. "Depending on where they pull data from, lenders could have a wildly different view of you from a score perspective."
FAQs about credit data furnishers
What is a data furnisher, and how does it affect my credit report?
Data furnishers are creditors that report your account details and payment history to the major credit bureaus. The information furnished affects the accuracy of your credit report, including your credit scores. Positive information, like timely payments, can improve your score, while negative information, such as late payments or collections, can decrease it.
How can I contact a data furnisher if there's an error on my report?
If there's an error on your credit report, you can contact a data furnisher, such as one of the major credit bureaus, by phone, email, or mail. Visit the specific data furnisher's website to find their contact information.
What types of organizations are considered data furnishers?
A data furnisher is any entity that provides information about a consumer's credit activity to credit reporting agencies (CRAs). This includes banks, credit card issuers, auto finance companies, collection agencies, and utility service providers, among others.
How often do data furnishers report information to credit bureaus?
Most data furnishers report information to credit bureaus every 30-45 days.
Can I dispute incorrect information provided by a data furnisher?
Yes, you can file a dispute with the credit bureau reporting the error and directly with the data furnisher. Provide documentation to support your dispute when possible.
What is the role of the FCRA in regulating data furnishers?
The FCRA regulates the industry, requiring accurate information and new reports every 30-45 days. Furthermore, it gives consumers the right to file disputes if any errors show up on their credit reports.
