What Are The 3 Credit Bureaus?

There used to be thousands of credit bureaus but the passage of the Fair US Credit Reporting Act left us with only three major bureaus. So what are the 3 credit bureaus?

What is a credit bureau?

A credit bureau is defined as a company that gathers credit-related information of individuals. Credit-related information includes credit history and credit ratings. This company then gives out the individual’s information, upon request of financial institutions, credit card companies, lenders, and so on.

What are the 3 credit bureaus?

In our country, we have three major credit reporting bureaus. These are Equifax, Experian and TransUnion. These agencies work independently from each other that is why credit reports and scores are hardly ever identical. The three major credit reporting bureaus each have their own methods for calculating the credit score. Although all of these models were originally derived from the FICO or Fair Isaac Company model, the bureaus have adjusted it to suit their own needs. Experian has the PLUS Score or Fair Isaac Risk, Equifax has the BEACON model and TransUnion has the FICO Risk Scoring model.

Do not be surprised if your credit score is not the same in all three bureaus or if your credit report is not identical. This is normal. The credit reporting agencies contain different information about your credit history and rate it differently. As long as all the information is correct and no errors are found, there is no need for actions to be taken.

Equifax (www.equifax.com)What Are The 3 Credit Bureaus

800-685-1111 (general) or 800-525-6285 (fraud)

P.O. Box 740241, Atlanta, GA 30374

 

Experian (www.experian.com)

888-397-3742 (general and fraud)

PO Box 2002, Allen, TX 75013

 

TransUnion (www.transunion.com)

800-888-4213 (general) or 800-680-7289 (fraud)

P.O. Box 2000, Chester, PA 19022

FICO Model

The FICO model is not only what the three major credit bureaus use but it is what most lenders and financial institutions use too. It is a scoring system that is used to come up with a credit score. It comprises of three digits that range from over 800 to below 300. Having a FICO score of 800 or above will give you an excellent rating while 300 makes you a very risky borrower to lenders. Wondering if your credit score is good?

Credit reports from the 3 bureaus

If a lender or some other company requests for your credit report and score, they will only receive a copy from the bureau that they have requested it from. You are entitled to one free credit report from each of the credit bureaus. There is one central website where you can request for it, annualcreditreport.com. You may also send a request through mail or over the telephone. After you have claimed your annual free credit report, you will have to pay on your next request. Price depends on the bureau and the state where you live in but it costs around $14.95 for one credit report and score. These credit bureaus also offer a 3-in-1 deal for $39.95 where you will get all three credit reports and scores.

All Three Credit Reports And Scores Myths

You might think you have credit report and scores all figured out. But what you think is right may actually be affecting your credit score. Read on to find out the myths around all three credit reports and scores.

Overdues are NOT okay, not even once in a while

In 2009, the The Credit Card Accountability, Responsibility and Disclosure (CARD) Act was passed. It required lenders and similar institutions to lessen the penalties for late payments and overdues. This got the people to thinking that making a late payment every once in a while will not affect their score when they get a cheap credit score report. This is very untrue.

While the penalties, fees included, for a late payment is less harsh than it was before the said Act was passed, it did not lessen the damage of a late payment on one’s credit report and score. Late payments can still negatively affect an individual’s credit score. In fact, on-time payments play a very big role on your credit report with about 35% attributed to your credit score. So be sure to pay those bills on time and never think that one late payment will not have an adverse affect on your credit score because it will.

Marriage will NOT improve your credit report and score

Some people think that upon getting married, their credit score will improve because their partner’s credit score is very good. It’s not like addition where 5, being your partner, plus 3, you, equals 8. These scores cannot be added together. You should know that when you get married, you will have a credit together with your partner but you will still maintain your own.

Lisa, had a good credit score report. Her husband had a very good score so she decided to focus on her husband’s credit score. She started using his name for all of their credit related activities. They got divorced. So what happens to her credit report and score? She is left to start all over again. She has not had much, if any, credit activities under her name so she will have to start rebuilding it.

That is why it is important to never neglect your credit history even after marriage. Remember that it is your own record.

Simply calling the credit bureau for an error on your report is NOT good enough

Most people think that once they find an error in one of their credit reports, all they have to do is call the bureau concerned and the rest will be taken care of. This fictional solution is pure fantasy. Calling the credit bureau is not enough. You should not only contact the bureau in question but inform all three credit reporting bureaus. The best thing to do is provide information why the error is an error. You must furnish proof and send a hard copy by mail. Do not forget to keep a copy for yourself too.

You should send a dispute request to all three bureaus even if it only appeared in one report to make sure that it does not appear again. You should also do a follow-up until the corrections have been made. Chances are, actions will not be taken to correct the error until you become persistent.

How Are The 3 Credit Reporting Bureaus Different?

If you have gotten hold of all three of your credit reports and scores, you may question why the information varies. Especially with the different scores that you have gotten since they should more or less be the same after all you only have one financial track record. So, why aren’t they the same? There is an estimated disparity of around 40 points across all three scores from the three credit reporting bureaus for every consumer. It isn’t a surprise then when you get a good score with one bureau and a poor score in the other. But why?

The simple answer would be that the bureaus; TransUnion, Equifax and Experian hold different information about an individual and compute the scores using different methods and algorithms. A big part of the credit report is the same across all three credit reporting agencies but a few bits of detail may be available to one and not available to the others. For example, you will obviously find personal information in all three reports. Personal information includes name, address, Social Security number and so on.

Credit history that all three bureaus take into account when computing for the credit scores are payment history, debt to credit ratio, types and kinds of credits, new credits and duration in the bureau. Where the scores will start to deviate is in the rating that the credit reporting agencies give the aspects of an individual’s credit history. For example, not the other two agencies put much importance in employment history like TransUnion and only Equifax has an 81-month credit history for the consumer’s credit accounts.

The credit scores from each of the bureaus are summed up differently. Equifax has its own credit score that determines the credit risk there is on an individual that a lender will be taking. TransRisk is what TransUnion call their scoring method and Experian uses their own PLUS score. These scoring systems usually range between 250 to 850, 850 being the highest and means the least risk.

Another reason why there are differences in the credit scores from the three bureaus is the information that is available to each of them. It is possible for a creditor for example to update a consumer’s credit report in one bureau but fail to update it in the other two agencies. Or there may be a discrepancy in a consumer’s credit report in one of the credit reporting agency’s records thus causing the significant increase or decline in the credit score.

You, as a consumer could also be affecting the difference in the credit reports and scores. You may have unknowingly supplied inaccurate information or you have failed to check your records for any anomalies. That is why every consumer should acquire their free credit report every year to make sure that everything in it is true and settle any incorrect information.

Which Credit Report Is Best?

Given that there are three credit reporting bureaus, we often find ourselves asking which credit report is best? All three differ from each other and if you have already gotten hold of your credit report from each of the bureaus perhaps even paid extra for your credit score, you have found that not all three scores are the same. This is confusing since you should get the same, if not somehow similar scores because after all you only have one track record. The fact that each of the agencies, Equifax, TransUnion and Experian are legit makes the matter all the more confusing. So which credit report is best?

Which credit report is best?

The direct answer would be depending on which credit report your creditor will be using. Scores between all which credit report is bestthree of the credit bureaus can differ from as much as forty points so it would be somehow pointless to keep track of all three. It is useless to pay attention to your record from Experian if your creditor will use TransUnion. That’s another reason why it is hard to say which credit report is best.

If you are applying for a mortgage or a loan and want to find out your chances of getting one or getting a good deal, your best bet is to ask your creditor which of three bureaus they will be pulling your credit record from. Then avail of the once-every-twelve-months free credit report that you are entitled to. Yes, you can get your free credit report from each of the bureaus once every year at no charge.

When you get your credit report though, you won’t be getting your credit score along with it. Credit scores are available for around $10. If you don’t want to pay that amount for a score, you don’t have to because what’s important really is your credit record. Sure, credit scores are important but as long as everything in your credit record is correct and in order then your your credit score is inconsequential.

Now what you should do once you have your credit report is to take a good look at it and see if you should improve it. Make sure that all the transactions have indeed been made by you and that everything else is true. Fraudulent transactions and incorrect details are commonly found in credit reports. If you find anything suspicious in your record, contact the agency as soon as possible. You will have to submit documents to prove that the record is incorrect. Remember that even the smallest details matter because you will be held accountable and it will affect your credit score.

If you get the chance to compare your credit records from all three bureaus you will notice that not all contain the exact same information. TransUnion for example, will have more detailed information regarding your employment history and Equifax will have an 81-month credit history containing your past credit accounts. So because each of the three consumer credit bureaus will not contain the same exact information about your credit history nor will they calculate your credit score the very same way either. Again, it’s more important to pay attention to which your lender will be looking at and the accuracy of your credit report. All this makes it hard to pinpoint which credit report is best.