⌛ Video Length — 00:03:20
Lesson Summary
To get familiar with your credit is to get familiar with the entities that report it. This entity is known as a credit bureau.
There are three major credit bureaus: Transunion, Equifax, and Experian.
Contrary to popular belief, credit bureaus are not a government entity. In fact, they are data collectors. Credit bureaus, also known as credit reporting agencies, do two things:
1. They compile your credit history based on your credit accounts, using your Social Security number or other identification information.
2. They provide your credit information, in the form of credit reports, to lenders and creditors to help them determine your creditworthiness.
They also provide credit reports to you, so you can better understand your credit situation.
Your credit history, including factors such as your payment history and your amounts owed, are used along with other factors to calculate your credit scores.
Do the three nationwide credit bureaus make lending decisions?
A frequent misperception about the three nationwide credit bureaus (Equifax, Experian and TransUnion) is that they make lending decisions.
Credit bureaus provide some of the information creditors and lenders use to help them make important lending decisions.
While credit bureaus collect credit information in order to make it available to certain third parties, the decision to deny or approve someone credit ultimately lies with the lender or creditor.
Each lender and creditor has its own criteria.
Where do credit bureaus get their information?
Credit bureaus use different sources for collecting information, and not all third parties report to the three major credit bureaus.
This means that each of your credit reports may contain different information.
Creditors keep the credit bureaus updated with your account status and payment history — two factors that contribute to your credit scores.
Speaking of credit scores, there are many different credit scoring models used by credit bureaus and other entities.
As a result, your credit score may vary between the three nationwide credit bureaus — even if all of your creditors report to all three. While many do, some creditors may report to only two, one or none at all.
What types of information do they report?
Credit bureaus collect the following types of information:
- Credit account information, including payment history, balance of an account, when the account was opened, date of the last activity, high credit on the account and the credit limit on the account
- Debt collections
- Bankruptcies
It’s important to note some companies may take these factors and others into consideration when evaluating your application for credit.
Things you should know….
Credit bureaus are also required to provide a free credit report annually and in the following instances:
- You’ve been denied credit or a benefit as a result of information on your credit report within the last 60 days
- You’re unemployed and seeking employment
- You’re on public assistance
- You’re a victim of identity theft
Now that you know about the credit bureaus and the role they play with your credit, let’s explore the credit scores they report.