Many people talk about credit bureaus. What are you doing? How are they different? And why three? (There’s actually a lot more to it than that, but it’s basically a specific trio that affects the lives of most users.) Let’s take a closer look at this topic.
A person’s credit report, credit statement, and credit rating are all made up of recognized agents called credit bureaus. Given the importance of credit reports and credit ratings for anyone trying to establish a line of credit finance for themselves, accurate credit rating information that credit reporting agencies collect becomes even more important.
Credit bureaus, also known as credit reporting bureaus, are companies that collect and maintain consumer credit information. The top three rating agencies in the US are Equifax, Experian, and TransUnion, all of which are publicly traded nonprofits. There are other, smaller specialist agencies, but if lenders check your loan, they will most likely do it with one of the major credit rating agencies.
The major credit rating agencies get credit-related information from the companies and lenders where you work. Lenders regularly report on whether you paid your bills on time, whether you were ever truly owed, and how much you owe. Credit bureaus also extract relevant public registers such as tax pledges or bankruptcy information from state and local courts. This information is also included on your credit report
Let us see this article, where we will focus on understanding what a credit bureau is?
What are Credit Bureaus?
In simple terms, a credit bureau can be thought of as an agent that collects information about a person’s credit, including loans, bill payments, accounts payable, and much more. This information can then be shared with credit information companies, which can evaluate credit and bank reports for financial purposes such as borrowing, credit cards, and more.
Credit bureaus receive information about individual loans from a variety of data providers, including creditors, credit institutions, government agencies, debt collection agencies, and others. Sometimes this information can include broader data such as electricity bills, cell phone bills, and telephone bills etc. This information is then compared in the form of a credit report.
The information collected by credit bureaus can be provided by creditors and those seeking information about their credit for a nominal fee. However, the credit bureau has no control over whether a loan should be given to a candidate or not.
Credit bureau example
Fair Issac Corp maintains FICO credit, while VantageScore Solutions, a joint venture between TransUnion, Experian and Equifax, manages VantageScore. The two evaluation methods range from very good to very bad:
Outstanding: FICO = 800-850; VantageScore = 750-850
- Very good: FICO = 740-799
- Good: FICO = 670-739; VantageScore = 700-749
- To be honest: FICO = 580-669; VantageScore = 650-699
- Bad: VantageScore = 550-649
- Very bad: FICO = 300-579; VantageScore = 300-549
What are Credit Reporting Agencies?
A credit reporting agency is a company that stores historical credit information for individuals and businesses. You will receive reports from lenders and various other sources combined into a credit report that includes the credit rating when it was issued. They can also be called credit bureaus. Lenders and creditors such as credit card companies and banks report to credit agencies the activity and loan history of their customers. Individuals and businesses can obtain copies of the information reported to them by contacting credit agencies or affiliated third parties and paying a fee.
Credit bureaus receive various types of information that can be included in their customer offers. There are generally two types of credit bureaus: reporting for both individuals and companies. The largest consumer credit bureaus are Experian, Equifax, and TransUnion. Credit bureaus serve different purposes in the credit industry. They maintain credit information, calculate credit scores, provide credit reports and work with marketing lenders.
What are the three credit bureaus?
If you have a credit card or loan, you most likely have a credit record with one, two, or three major credit bureaus: Equifax, Experian, and TransUnion. They collect and maintain data on credit usage by consumers.
They can collect and sell information about your consumer’s credit history without your consent. Companies that check your credit, such as, however, credit card companies and lenders need to have good reasons to check your credit record,Review your loan application. In most cases they need your permission.
The credit bureaus that collect them usually use:
- Calculate credit score.
- Making credit decisions, eg.Do you offer credit cards or loans and at what interest rates.
- In some previous work reviews.
- To evaluate leasing applications.
- When determining certain insurance rates.
- To decide whether you need to pay a down payment for utilities.
You have the right to view your credit report and dispute information that was inaccurate or should no longer be reported due to age.
The three major credit bureaus
There are several different credit bureaus in the United States, but only three are particularly important nationally: Equifax, Experian, and TransUnion. This trio dominates the market to collect, analyze and distribute information to consumers in the credit market.
Based in Atlanta, with 7,000 employees and “offices in the US and 18 other countries. It is a market leader in most of the countries like the southern and eastern United States.
The company, headquartered in Costa Mesa, California, originally processed reports for the western United States. It is now called “the world’s leading information services company.” The company employs approximately 16,000 people in 39 countries and is headquartered in Dublin, Ireland, with offices in Nottingham (United Kingdom) and Sao Paulo (Brazil).
Proposes itself as the world’s leading provider of credit information and information management services. The Chicago-based company has offices and subsidiaries in 33 countries. It employs about 3,700 people.
How do credit bureaus work?
All types of Credit institutions and credit issuers work with Credit bureaus to help them to make credit decisions. The three largest credit bureaus in the US are Equifax, Experian, and TransUnion, although there are many smaller companies offering similar services.
The primary objective of credit reporting agencies is to ensure that creditors have the information they need to make credit decisions. Typical clients of credit bureaus are banks, mortgage lenders, credit card companies, and other personal finance lending companies. The credit bureau is not responsible for whether a person should obtain credit or not; They simply collect and synthesize information about a person’s creditworthiness and make it available to credit agencies.
The type of information the credit bureau collects
The credit bureau maintains a number of details relating to you and your creditworthiness, starting from the moment you opened your first credit account. For example, credit bureaus collect information about credit accounts: repayment history, amount of credit available, amount of credit you use, collection of outstanding debts, details of public records such as bankruptcy, tax stakes, foreclosures, and foreclosures.
Non-credit information, like current and previous address, date of birth, and salary information, is available with Credit reporting agencies.
Although the personal information used on your credit report will not be used to calculate your creditworthiness, employers can use it to verify your identity.
Where do the credit bureaus get their information?
Credit bureaus rely on banks and other companies to provide them with consumer information. Many of the companies you do business with regularly send updates to your open accounts. Credit bureaus can also get information about you from public court records.
Credit bureaus use different sources of information and usually do not share information. Therefore, your credit report can vary slightly from table to table. The entire account may be missing from your credit report.
Some types of accounts do not appear regularly in your reports, such as: Utilities and Rentals. However, it may still be included in your report if there is a payment issue leading to billing. The data also comes from public records such as:
- Bankruptcy filings.
What data do credit bureaus keep?
Your credit report contains identifying information such as name, date of birth, social security number and address (past and present).
They can also contain:
- List of current and past credit accounts.
- Payment history, eg. Do you pay on time.
- Negative information such as missed payments, billing, bankruptcy, repossession and foreclosure. All kinds of negative reviews will appear in your reports after a certain period of time, usually seven years.
- Track who has access to your credit report, for example when you apply for a loan or when a marketer wants to pre-approve an offer.
Who uses credit bureau data?
Banks and credit card companies are the clearest users of the information provided by credit reporting agencies. A number of other companies turn to the credit bureaus to help you make your decision. Employers, insurance companies, landlords and debt collection agencies want information from credit bureaus.
Credit bureaus provide preliminary lists of banks and insurance companies to help these companies decide which consumers can benefit from their products. For example, a credit card issuer might request a high-ranking list of credit card users to submit offers of that credit card user for balance transfers. If you’ve ever wondered how pre-approved credit card offers liquidate your bank account, or how banks know how to offer unwanted refinancing on your mortgage, here’s how.
Credit bureau dispute?
If you find information on your credit report that shouldn’t be there, you can request removal through a process known as a dispute. To dispute credit report information, you will need to contact the credit bureau whose report you found the error.
If you find incorrect information on your credit report, it is in your best interest to dispute it immediately. According to a 2012 study by the Federal Trade Commission, one in four Americans have a bug on their credit report. Errors in your credit report can affect your credit score and negatively affect your credit approval. The sooner you take action, the sooner the problem can be resolved.
If you see an error on your Experian credit report, check to see if it is also on your TransUnion and Equifax report. Then dispute the mistake directly with the credit bureau. The law requires the credit bureau to report the matter to the other two bureaus. However, you need to argue directly with the credit bureau to cover all the reasons.
The easiest way to dispute credit report errors is online with Experian, Equifax, or TransUnion.
Ways to dispute information on your credit report
TransUnion and Equifax have their own credit reporting procedures, but Experian offers three methods for filing disputes:
- Online: Access your Experian credit report and initiate a dispute at the Experian Dispute Center. You do not have a fee for using this service.
- By Phone: To initiate a dispute over the telephone, call the number listed on your Experian credit report. If you would like a copy of your credit report sent to you, call 866-200-6020.
- By Mail: You can submit a challenge without a credit report by contacting Experian, P.O. Box 4500, Allen, TX 75013.
Step by step guide to online challenges
To review Experian credit reports, an easy and quick method to question is online and if any corrections are submitted via the Online Dispute Center.
Your Experian credit report is divided into sections with the following headings: Personal Information, Accounts, Questions and Possible Public Records (not all credit reports contain records in public records). Information that could damage your balance may be shown in an additional section entitled Potentially Negative.
If you find inaccurate information on your Experian credit report, here are the steps you can take to resolve your dispute online: Further information on dispute resolution procedures can be obtained from the dispute resolution center.
- State the reasons for each dispute
- Review the dispute and submit
- Let the dispute process continue
If necessary, Experian will contact the data provider (the original source of the disputed information, such as a lender or other company) to review the information you are complaining about. Please note that information that is verified as true cannot be deleted from your credit report.
What happens after you file a dispute?
After you submit a dispute, Experian will begin solving the problem. The data provider (for example your bank or credit card company) will be asked to review your records. Then one of three things will happen:
- Wrong information will be corrected.
- Information if not verified will be deleted.
- Information that is verified as truth will be stored on your credit report.
How to track the status of your dispute
After submitting your dispute, Experian will send you an email with a status update. If you already have an Experian account, you can also view dispute resolution in the main Alerts section of your Experian account. Some of the notices you will receive when Experian resolves your dispute include:
- Open: This means that the dispute process has started.
- Update: Your dispute resolution is complete and your credit report is updated with the results.
- Dispute Ready Results: Your credit report has been updated with the results of dispute resolution.
How long does it take for collection agencies to report to the credit bureau?
Collection agencies can report arrears to the credit bureau after receiving an invoice from the original lender. There is no grace period before collection accounts become eligible for reporting. The agency can continue to report to the credit bureau about your debt due for seven years plus 180 days from the date the bill was drawn into collection.
Then! What is
Credit Rating agencies
It is very easy to distinguish credit bureaus from rating agencies, especially since credit bureaus are also known as credit reporting agencies. Rating agencies deal primarily with companies and the creditworthiness of companies. They arise because of the investor’s need to compare the risk / return potential of certain investments and to assess the financial stability of companies that wish to borrow by issuing bonds or preferred stock.
There are three main rating agencies: Fitch, Moody’s, and Standard & Poor’s. These agencies research and analyze company finances and give them credit ratings.
Unlike credit reports or ratings, these ratings are designed to provide investors with information about companies and issuers of debt instruments. The agency also assesses certain debt and fixed income securities that the company issues. The company also assesses insurance companies based on solvency.
Credit Ratings are given in the form of a letter such as BBB or FFF so that investors can quickly review debt instruments and assess risk. Rankings differ among the three main agencies, so it’s important to understand which one delivers the letter. Credit ratings are based on various variables and include some market-related, historical, company-level information. The ratings range from business attribute to underlying investment and are designed to provide an overview of the likelihood of repayment of a loan from a borrower.
Thus, the credit bureau is the central information platform needed to create credit reports that can directly affect your credit management. Whether you are financially healthy or not, whether you are looking for credit or not, try to keep your score higher by maintaining good habits about your finances and checking your creditworthiness at least twice a year after being approved by the Credit Bureau.