What do the 3 credit bureaus do?

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The three major credit bureaus are Equifax, Experian and TransUnion. These three organizations use information from lenders and the public record to generate both your credit history and your credit score.

Although the three bureaus provide the same basic service, each bureau does things slightly differently — which is why your credit score might go up or down a few points depending on which bureau is doing the reporting.

What do the credit bureaus do?

Each of the three credit bureaus collects various financial information, including your history of credit applications, debts and payments. Then, the bureaus use that information to generate a credit report. You are entitled to one free credit report from each credit bureau every 12 months, and it is your responsibility to review the report and ensure it is free of errors.

Credit bureaus also use the information in your credit report to generate your three-digit credit score. Lenders use this credit score to determine your creditworthiness. A lower credit score suggests that you are more likely to be a credit risk — essentially, that you might fail to pay back your debts in a timely fashion. A high credit score suggests that you have a history of using credit responsibly. Although your credit score is not actually included in your credit report, there are many ways to access your credit score online.

Equifax, Experian and TransUnion aren’t the only financial entities that give out credit scores. Other financial organizations, such as FICO, use credit history information to issue credit scores — and the FICO scoring model is currently the industry standard. Recently, alternate credit scoring models have started taking into account not only credit history, but also certain financial transactions, such as rent and utility payments.

What information do they collect?

The three credit bureaus collect information provided to them by lenders as well as information available in the public record. This means that your credit report is likely to include the following:

  • Basic personal information: Your name, date of birth, Social Security Number, address and telephone number.
  • Open credit accounts: If a credit card, loan or mortgage is taken out under your name, the lender will report this information to the three credit bureaus.
  • Payment history: Lenders also report your payment history to the three credit bureaus, including whether those payments were made on time.
  • Credit utilization: How much of your available credit you’re currently using.
  • Credit inquiries: How often you request new lines of credit.
  • Public records: If you have filed for bankruptcy, received a tax lien or experienced foreclosure, this information will appear on your credit report.

Alternate credit scoring models also track items like utility payments or bank account balances. This is so that people with no credit history, or who are working to rebuild their credit, can show evidence of financial responsibility. If a lender sees that you pay your rent and phone bill on time every month, they might be more likely to issue you a line of credit.

How do the credit bureaus get your information?

Credit bureaus get your information from two sources: lender reports and public records. Lenders, including credit card companies, generally send reports to the credit bureaus every 30 days, or once per billing cycle. This is why it’s always a good idea to make up a late payment as quickly as possible; in many cases, if you get that late payment made before the credit card company sends their report to the credit bureau, it won’t show up as a negative mark on your credit history and it won’t hurt your credit score.

Although credit bureaus get their information from reputable sources, mistakes sometimes happen. For example, it’s not uncommon for a credit account to appear on your credit report even though it actually belongs to someone else with a similar name. It’s important to monitor your credit reports regularly and contact the credit bureau to dispute any errors. It is easy to dispute errors online and credit bureaus tend to pull errors from credit reports very quickly.

Why might your credit reports and scores be different between bureaus?

Not all lenders report to all three credit bureaus, so your credit report and score might differ slightly depending on which bureau received which report. Likewise, each bureau updates credit reports and scores on a different schedule, so if you recently took steps to improve your credit (such as paying off old debt), you might see one bureau raise your credit score before the other two.

Your credit score might also differ depending on which scoring model is being used. FICO and VantageScore are two of the biggest credit scoring companies. TransUnion uses the VantageScore model and Experian uses FICO. Equifax has its own scoring model but also offers FICO scores.

That said, your credit score is unlikely to have significant variations among the three bureaus. If you have good credit with Equifax, you’re going to have good credit with Experian and TransUnion as well. If you have a poor credit history, expect it to be reflected in each bureau’s report and credit score.

Although the three credit bureaus occasionally make mistakes, overall they present an accurate picture of the way you interact with credit — which means that if you want to improve your credit history and boost your credit score, it’s important to learn how to use credit responsibly.