People often talk about credit bureaus, but what exactly do they do? How are they different from one another, and why are there three main ones?
The three main credit reporting agencies are Equifax, TransUnion, and Experian. If you have never heard of them before, do not fret!
In this article, we’re going to look at these bureaus in-depth, and try our best to rid any of the confusion and mysticism that may surround them. Read on for more.
Credit Bureaus – What are They?
Where credit ratings will usually be collected mainly for investors regarding governments, companies, and bonds, credit scores and credit reports are generally collected for lenders and governments regarding individual borrowers. They work with the creditworthiness of customers.
One of the interesting features of credit bureau business models is the way that information is traded. Financing companies, banks, landlords, and retailers will send the credit information of consumers, for free, to the credit bureaus, who will then sell the consumer information back.
Credit bureaus analyze and package the credit reports of consumers, which they use to determine their credit scores. Online credit ratings, which are issued in letters, three-digit numbers are used to issue credit scores, usually ranging somewhere around 300 – 850.
Your credit score will have an effect on the loan amounts that you will be able to qualify for, the interest rates that you will pay on those loans, as well as credit cards, and can even influence your employment and renting opportunities. Even though credit bureaus and credit rating agencies are private companies, the FCRA (Fair Credit Reporting Act) regulates them highly.
They have limits on how they disclose, collect, and disburse consumer information. The 2007-2009 Great Recession put them under some major scrutiny.
The Three Main Credit Bureaus
There are a number of different credit bureaus in the United States, but there are only three that are significant internationally. These three bureaus dominate the sector for analyzing, collecting, and disbursing consumer information in the credit market.
Experian
Experian’s headquarters are located in Costa Mesa, California. They originally handled reports for the Western part of the US, but now promotes itself as the leader in the global information services industry.
The firm has around 16 000 employees in 39 countries, with their corporate headquarters being located in Dublin, Ireland. They also have operational headquarters in Sao Paulo, Brazil, as well as Nottingham, in the United Kingdom.
Experian offers solutions and products regarding analytics, consumer credit, data quality management, business information, and more.
Equifax
Atlanta-based, Equifax employs over 7 000 people, and operates in the United States, as well as other countries like Canage, Argentina, Chile, Brazil, Costa Rica, El Salvador, Ecuador, India, Honduras, Irelend, and more. They are particularly prevalent in the eastern and southern areas of the US, and claim to be the leader of the markets in the majority of the countries in which they operate.
They offer products and solutions for alternative data, credit unions, credit information, home equity, market analytics, and more.
TransUnion
The TransUnion is marketed as the global leader in information management services and credit information. They are based in Chicago and have affiliates and operations in more than 30 countries, employing around 3 700 people globally.
TransUnion offers credit monitoring, credit scores, credit reports, ID Recoveries, and more.
Similar, but Different
Each of these credit bureaus collects the same kind of data about consumers. This information consists of personal data, like your address, name, social security number, etc. It also consists of your credit history, like your payment history, debts, and credit-application activities.
Credit bureaus will commonly collect data from private and federal housing and student loan lenders. The IRS does not report overdue income tax to credit bureaus, but if a taxpayer does not repay their debt, the IRS could file a federal tax lien with the local county.
Credit info is generally not collected with the same level of accuracy for each bureau, so you should check each score and report.
Summary
Credit bureaus play an important role in the lives of everyday consumers. Checking your credit score with them frequently is the best way to ensure that you’re always able to pay the least for any loans you may take out, as well as the interest rates on your credit cards.
