Understanding the 3 Major Credit Bureaus

Understanding the 3 Major Credit Bureaus

Every time you apply for credit, your creditor, lender, or card issuer assesses your history from the credit bureaus. Although this might seem confusing, the process is actually quite simple. First, banks and other financial institutions share your data with agencies. These are agencies that report credit. Next, these agencies process the data and share it with legitimate bodies.

So these credit bureaus gather data about your score, usage, and history. There are three prominent names here, and each of them sources data in different ways. Here is a comprehensive guide to help you understand each of them and how they operate.

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What Do Credit Bureaus Do?

Credit bureaus collate data for your financial report. They collate and assess your financial information. So, they collect relevant data about your finance. They also keep a tab with your creditors. And collect other information, such as bankruptcies and collection items.

Based on these reports, they develop a profile that summarizes your financial situation. This profile can be shared with creditors, lenders, financial institutions, and other bodies. These bodies want to know how credible or reliable you are with your finances. There are generally three of them in charge of this. Each of them provides similar results from their assessments.

What Are The Three Credit Bureaus?

The three recognized credit bureaus are Equifax, Experian, and Transunion credit report agencies. All creditors, lenders, and other financial institutions make reports to these institutions. Reviewing the reports from each of them can help you understand your credit score.

All the institutions have unique assessment methods. But they are all important and accepted anywhere. So, you should request your score from each of them to get better insights into your history and status. Below are further details on each of them:

Reporting Agency  Score Monitoring Fraud Alert Credit Score Check  Free Credit Report 
Equifax Daily Yes $15.95 Yes
TransUnion  Daily at $0 Yes $19.99 Yes
Experian  Daily at $19.95/mo Yes $19.95 Yes

Equifax

Equifax

Also called Equifax Credit Information Services Private Limited (ECIS). This body is one of the three recognized credit score bureaus with licenses around the world. The institution was founded in 2010 and is popular in the USA and India. Like the others, it creates a profile from the information banks and financial institutions provide.

To check your free credit report, you can fill in the request form on the website. Every user gets one free report. After the free offer, you’d have to pay. The agency considers some factors to calculate the Equifax credit score value. These are loan repayment history, income, demographics, number of cards, and loans.

Pros

  • Monitors the three bureaus’ files and reports.
  • Gives accurate information about your score and profile.
  • Automatic fraud alerts.
  • Helps with identity restoration and wallet loss.

Cons

  • Prone to a data breach.
  • Lack of transparency during a data breach.

Experian

Experian

Experian is another credit bureau that manages data analytics and consumer credit reports. The American-Irish company collects and processes data. Its data covers more than 1 billion individuals and businesses worldwide. Its headquarters is in Dublin, Ireland, and it operates in 37 countries.

Experian is regulated by the Fair Credit Reporting Act (FCRA). So every consumer has access to one free report every 12 months. As a result, there are important factors to consider when working with them. These are your payment history, the total amount owed, your financial history, and your types.

Pros

  • Creates opportunities for consumers.
  • Provider access to debate collection leverages.
  • Helps fight against identity theft.

Cons

  • Risk of a data breach.
  • Rarely used as a standalone for decisions.

TransUnion

TransUnion

It is an American credit reporting agency. This reporting agency collects, processes, and reports data for over 1 billion individuals. Its audience span 30 countries. These include data for more than 65,000 businesses. It was initially formed as a holding company for Union Tank Car Company in 1968.

Transunion began rendering this service to financial institutions in 2014. Several banks used this agency when they needed information. So, its jurisdictions span many countries. Transunion serves many popular banks such as Avianca, Barclays, Capital One, U.S Bank, etc.

Pros

  • Profile monitoring and education.
  • One-touch account lock to restrict access to your report.
  • Antitheft and instant fraud notifications.

Cons

  • Risk of identity theft.
  • Lousy customer service reputation.

How Do Credit Bureaus Get Your Information?

All 3 credit bureaus get their information in the same way. The two major channels are through free and paid means. It depends on how gated the information is, so reports easily get some information. In contrast, others will need efforts by the agencies to get.

The free data is usually from financial institutions like banks and retail card issuers. Other means include unions, and auto lenders, mortgage lenders. They also source from debt collectors, and federal and state agencies.

Some other reporting companies voluntarily share your information with the bureaus. In certain scenarios, your information might be in public records. So, they can buy these records such as tax liens, bankruptcy filings, and court judgments. 

What Keeps My Credit Score and Reports Private?

Credit reports are important data that are protected with the latest encryption technologies. All three credit reporting agencies ensure measures are in place to keep your data safe. For example, search engine results deny access to your family. A law also allows you to sue for damages or $1,000 if someone attempts to access your financial history with your personal information.

Only a handful of legitimate organizations, businesses, and individuals can access your data. These companies include banks, creditors, utility companies, insurance companies, employers, and landlords. Government agencies, collection agencies, and court orders can also lead to someone accessing them.

Some of these organizations need your consent, though. For example, you’ll have to provide written consent to grant an employer access to your report. But, you will not get contacted for reports related to pre-approved offers.

What Data Do The Credit Bureaus Maintain?

As mentioned earlier, they keep track of much important information about you. These data are sourced from different financial institutions. Check out the major data collected by them below:

Account Application: Anytime you apply for a bank account, they share your data.

Account Opening: As soon as you open an account, they will receive reports of the new account.

Loan and Credit Limits: Details of the amount loaned and card limit also go to credit report agencies.

Account Balance: The agency collects data about your account type, status, and balance.

Other data collected include your payment status and account in collection. They might also reveal tax liens, court judgments, bankruptcy filings, etc.

How to Check Your Credit Reports

Checking your credit report is vital for keeping a clean record. It gives you more insights into credit denials and scores. It can help track your financial history too. Every consumer gets a report check per year. This is available for free from each of the three agencies. But, you should request one from all three agencies to get the best insights.

You’ll be able to access your free credit report via phone, mobile, or mail. For the phone call, you can call the official toll-free number. You can apply from the official website online (www.annualcreditreport.com). Or print out a form and mail it. Below is a step-by-step guide to requesting online:

  • Visit the official website of any of the three agencies.
  • Click on the Credit Report request tab.
  • Fill in the form and provide the necessary details.
  • Submit and wait for the report via your email.

Conclusion

There isn’t much to take in when understanding these financial institutions. They are in charge of managing the financial history of every individual. So they ensure timely, accurate, and organized information are available for everyone.

Each of the agencies has its unique assessment approaches. But they all offer similar results in the long run. That’s why it’s advisable to request a report from all three to get better insights into your status.

FAQs

What credit bureaus are the best?

There is no “best” credit bureau. Each of the 3 credit bureaus is acknowledged and accepted anywhere. Your score might differ across the three, so you can opt for the one where your score appears highest. Although the former is the largest, the first two are sometimes considered to provide the most accurate report.

Is my data secure in the credit bureau?

All credit reporting agencies have extensive data to manage for millions of consumers and businesses. So, an all-around security measure is in place to avoid unauthorized access. Besides, all the data storage and transfers have the latest encryption technology.

What role do the three credit bureaus have?

They collect, process, and manage all your credit history. They receive data reports from banks, lenders, card issuers, and other financial institutions. These data get processed to develop a profile for each consumer based on various factors.

What gets reported to credit bureaus?

Your financial profile comes from various reports gathered by these reporting agencies. Some reports include tax liens, account  balances, account types, and payment histories. Others are credit limits, cards, car loans, mortgages, student loans, bankruptcy filings, etc.