We have often come across the terms ‘Credit Bureaus,’ ‘Credit History,’ ‘Credit Report,’ etc. Do you get confused when you come across these terms?
Let’s say suppose you are planning to borrow some money from a lender. In such a case, the lender will review your credit history from one or several of the credit bureaus. This process shall sound a little tricky for you if you are unaware of the credit bureaus.
Hence, we are here to learn what a credit bureau is, the top 3 credit bureaus, what they do, and how they collect your information.
Key takeaways from here
- A Credit Bureau is sometimes termed a ‘Credit Reporting Agency.’ It is a reporting agency that collects your credit information from various sources and creates your credit report.
- There are three major credit reporting agencies in the US, namely TransUnion, Experian, and Equifax.
- These credit reporting agencies share your credit report with the lenders who wish to do business with you.
- If you find any errors/mistakes in your credit report, you can easily dispute information.
Let us start our discussion with our primary topic of the three credit bureaus and list the importance of credit information these reporting agencies collect.
What are the Three Credit Bureaus?
There are many credit bureaus currently operational in the US. Among several of them, the top 3 credit bureaus are generally considered while searching for a credit report:
These credit bureaus collect data about your credit use. In simple terms, if you have a credit card or a loan, your financial information will be shared with the credit bureaus, though the amount of data with these credit bureaus may vary. (The reason why it varies is mentioned at the later stage of this blog.)
These credit reporting agencies have the right to show your credit report/history to lenders and credit card issuers without taking your consent.
However, money lenders and credit card issuers must have a reason why they want to access your credit report/history. In most cases, they need your consent to do so.
Now, what role does the data collected by credit bureaus play?
The data/information collected by credit bureaus is normally used to,
- Create/update your credit score based on your credit history.
- If this information is used by money lenders/credit card issuers, it will help them to decide whether they can give you money/credit card. Additionally, what must be the interest rate at which they can lend the money to you.
- Top organizations do several pre-employment checks. Organizations may look at your credit history before employing you.
These are the three major reasons why credit bureaus collect your credit information.
Knowing what information these credit bureaus collect, you must also know what they save.
What Credit Information is Saved by These Credit Bureaus?
Generally, your credit reports have information like your full name, date of birth, social security number, etc. However, this is the general information saved by these credit bureaus. Additionally, they store,
- Your overall payment history of the past. Whether you have paid it on time, or you have paid it with the late fee. These are usually utility and telecommunication bills.
- It stores negative information like bankruptcy, foreclosures, missed payments, etc. (Please Note – Negative information generally stays in your credit report for seven years.)
- Just for you, these credit bureaus save information regarding who accessed your credit report in the past.
We wish to clarify that these credit bureaus are regulated by the Fair Credit Reporting Act (FCRA). It means they have limitations on how they collect the information & whom they can show your credit information to.
How do Credit Reporting Agencies Find your Credit Information?
The creditors/money lenders play a significant role in sharing your credit information with these credit reporting agencies.
Whenever you borrow some money from a moneylender, they generally access your past credit report to decide whether to lend money & what must be the interest rate. After you repay your debt, these creditors may share your information with these credit bureaus.
However, they may share it with one, two, or all of these major credit bureaus. Hence, the credit information stored by these credit reporting agencies may vary, and your credit report too.
Why do Credit Scores Differ Between Credit Bureaus?
Till now, you might have accessed your credit scores using several websites. You may see a little difference in your credit scores, but that is normal. It is bound to happen.
Firstly, each of these credit bureaus stores different information. It depends on how frequently they update your data.
Secondly, as said before, it is not sure that creditors will share your credit information with all the credit bureaus. They might prefer one over the other.
Lastly, there are several scoring models. For example – FICO Score 8, VantageScore, etc. Each of these scoring models has a different pattern of calculating the risk.
Owing to these reasons we mentioned, there is a possibility of getting different credit scores from different credit bureaus.
We recommend you refer to your credit scores from all of these top 3 credit bureaus before borrowing any money. It will help you understand where you stand currently concerning your credit report.
Before borrowing any money and deciding on the interest rate, ask your moneylender which credit bureau they have referred to. This will help you to know the credit score you are evaluated on.
Which Credit Companies Report To Which Credit Bureau?
If you are applying for a credit card and want to know which credit bureau these major credit card companies report to we have created a list for you.
|Major Credit Card Company||Credit Bureaus|
|Bank Of America||Experian|
|Credit One Bank||Equifax, Experian & TransUnion|
|PNC Financial Services||Equifax, Experian & TransUnion|
|Wells Fargo||Equifax, Experian & TransUnion|
Some credit card companies like to use a specific credit bureau that they partner with to determine if they should approve your credit card application while others like to use all three major credit bureaus. Most of these major credit card companies like to use a mix of one or two credit bureaus to get a better overall picture of your credit history.
It is important to note that while these credit card companies may only look at one or two of the credit bureaus for your financial history before they approve your application that doesn’t mean that they only report your financials to that specific credit bureau. In fact most of the major credit card companies report to all three credit bureaus but may only reference one or two of them before they approve you.
Is it Possible to Check your Credit Report & Credit Score for Free?
The Fair Credit Reporting Act (FCRA) gives you the right to check your credit report for free once a year. You can access your credit report using the annual credit report, an authorized website to do so.
You can check your report & score from any of these top 3 credit reporting agencies – TransUnion, Experian, and Equifax.
Just for your information, Experian provides you with an updated credit report every month for free. However, if you wish to see your credit report monthly using TransUnion & Equifax, you will have to upgrade to their paid plans.
What if There is an Error in your Credit Report?
You might wonder how come there is any mistake/error in your credit report. But it is possible. One in four Americans finds a mistake in their credit report, as per the study conducted in 2012 by the Federal Trade Commission.
If you find any errors/mistakes/incorrect information in your credit report, the Fair Credit Reporting Act (FCRA) gives you the right to dispute credit information and get it changed. This erroneous information may lower your credit scores. It may create a significant impact on your future loan approvals.
Legally, if you find an error in your credit report, you can file a dispute with the necessarily required proof to any of these credit bureaus. The credit bureaus may further validate your query, and if it turns out to be accurate, they will change the information in your credit report.
Related Information that might be Important for your Credit Card :
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What Else Do You Need to Know About Credit Bureaus?
There are several instances from the past when scammers have created duplicate accounts using your name. This may affect your credit report, in general.
Hence, if you wish to avoid affecting your credit report & score, you have the right to freeze your credit by contacting all 3 credit bureaus. You may unfreeze it whenever you need any loans, or apply for new credit cards. These activities will not affect your credit score, neither will scammers affect your credit score.
How Do I Contact All 3 Credit Bureaus?
If you need to contact the credit bureaus to learn about your credit score, dispute items from your credit report, freeze or unfreeze your credit you can go online to their website or call them.
Credit Bureaus also called Credit Reporting Agencies, have a significant impact on our lives. The credit information stored by these credit bureaus helps them in creating our credit report, which is an essential factor in determining whether we can get a loan, get a credit card, and so on.
Various timely discussions released by these credit bureaus help us in improving our credit scores. Additionally, the right to dispute information also gives us the power to update incorrect credit information.
However, please ensure that you do not miss out on reading any of this information, as it somehow relates to your day-to-day activities. It may help you in creating a better credit report, thus creating a better credit score.
1. What is a good FICO score?
2. What credit score is needed to purchase a horse?
3. How can you ruin your credit score?
1. If you are using too much credit, based on your limit
2. If you have defaulted any accounts
3. If you have missed out on any payments
4. If you have applied for major credit in a shorter period of time
4. What has the most significant impact on your credit score?
5. What is an average credit score in the USA?
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