You apply for a new credit card and find out within a few minutes that your application has been approved. Congratulations! You’re about to get that new card in the mail and can use it to make purchases and payments in an entirely fraud-liability-free environment. Later that same year you pull one of your credit reports and, to your surprise, the account is nowhere to be found. You hop out of your chair and exclaim for all to hear, “why is my creditor not reporting my payment history to the credit bureaus?”

They don’t have to

Yeah, you read that right. Almost all “furnishing” of information to the credit bureaus is entirely voluntary. And, you have no right in the Fair Credit Reporting Act to force your creditors to report your information, including your payment history, to any credit bureau.

Of course, the reporting of your information to the credit bureaus is almost universally standard. There are some 14,000 companies that routinely furnish information to the credit bureaus every month. But they’re doing it by choice, not by force.

You can certainly ask your creditor to begin reporting your information to the credit bureaus. But they can certainly say no and that’s pretty much where the conversation ends, unless your business is portable.

What is “portable” business?

Unless you have disastrous credit reports you probably have lenders soliciting your business repeatedly. This means at any given time you can simply respond to one of those many credit card offers you get in the mail and open a new account.

If that new account is with a creditor that does, in fact, furnish information to the credit bureaus then you’ve just created an option to replace your non-reporting card. If credit reporting is that important to you, your business should be portable.

As your use of credit extends years and, eventually, decades it’s likely you’ll have acquired many credit cards. And, if you’ve followed the smart advice you’ve never closed any of them. This means you have quite an impressive inventory of payment options. The odds are most, if not all, of them are on all three of your credit reports.

How can I avoid opening an account that doesn’t report to the credit bureaus?

Whether it’s a credit card, auto loan, mortgage, or some other form of credit, you’ll have the ability to do your due diligence prior to formally making an application. One of the things you should research is whether or not that particular creditor reports to all of the credit bureaus as a matter of standard practice.

If the creditor does, in fact, report to all three then you’re good to go. If, however, the creditor doesn’t report to all the credit bureaus then you must decide if that’s the right creditor for you. How will you know about the credit reporting practices of a particular creditor? It’s simple…ask them. It’s not national security and the creditor can let you know if they report, or if they do not before you apply. Then you can make a more informed decision.

But why wouldn’t they report?

In order for any creditor to report to a credit bureau they must have an account with them. So, a creditor that reports to Equifax, Experian, and Trans Union actually has contractual agreements with all of those companies. One of those contracts is a furnisher agreement. This agreement allows the creditor to furnish information to the credit bureaus.

This process of furnishing isn’t free. So, a creditor can actually save a few bucks by only reporting to two of the three credit bureaus instead of all three. It also helps to reduce their liability to credit-related lawsuits if they do not report to all three of the credit bureaus.

Don’t be tempted to seek out creditors that don’t report

I know y’all are smart about this whole credit reporting thing. But don’t outsmart yourself here. You would rather deal with lenders that do report as a standard practice than to deal with lenders that do not.

You might think, “If I miss payments or default, I can avoid some credit reporting problems.” You’d be mistaken. If you miss payments or default the creditor can certainly choose to start reporting that information to the credit bureaus. And, if you default on the debt it might end up with a collection agency, and they’ve almost certainly reported you to the credit bureaus.

Dealing with creditors that do report to all three of the credit bureaus means you’ll get the positive value out of paying your bills on time. Dealing with creditors that do not means you won’t get the full value out of properly managing your credit. If you’re in a credit building or rebuilding mode then your choice should be pretty clear.