Credit Bureaus: What You Need To Know

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Credit bureaus collect information about your financial life and compile your credit report.

Thought you were the only one keeping track of your personal finance choices? Think again. Credit bureaus collect details about your finances. That information is regularly sold to lenders that use it to determine whether or not to offer you that loan.

These for-profit organizations know so much about your financial details. So, it’s only fair that you know a bit more about them, as well. Let’s dive deeper into what a credit bureau is and how these organizations can impact your life.

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What Is a Credit Bureau? 

Credit bureaus are sometimes called credit reporting agencies or consumer-reporting companies. But whatever you call these organizations, the business model is the same.

A credit bureau collects information about individual consumers’ financial information. The data is organized in a credit report, typically tied to your Social Security number. Once compiled, credit bureaus can sell credit reports to potential creditors or landlords for a fee. Potential lenders use the information when making lending decisions.

Notably, a credit bureau is not a credit rating agency. A credit rating agency provides ratings for companies that take on debt to determine how likely it is that a corporation will default on the debt. Credit bureaus are focused on consumers, not corporate debt obligations.

How many credit bureaus are there?

In the United States, there are three major credit bureaus — Equifax, Experian, and TransUnion.

But beyond these three credit bureaus, there are many more. The Consumer Financial Protection Bureau regularly updates a list of legitimate consumer reporting agencies with information about the details collected. A few of the less popular credit bureaus include:

  • ChexSystems: ChexSystems is a popular reporting agency for financial institutions and collects information about checking account applications, openings, and closings.
  • Innovis: Innovis collects personal information and credit history.
  • National Consumer Telecom & Utilities Exchange: NCTUE collects information about utility accounts, including payment history, connect requests, and charge-offs. Providers may check this information before opening your utility account.
  • AppFolio: Property managers often use AppFolio, which provides information about credit, income, evictions, and criminal history.
  • The Retail Equation. The Retail Equation reports product returns and monitors exchange fraud.

Of course, this is not an exhaustive list of credit bureaus. But it should give you an idea of what information might be collected.

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How Do Credit Bureaus Work?

So, at this point, you know that credit bureaus are busy gathering information about your financial life. But how do they get this information?

Credit bureaus create partnerships with a range of lending institutions, collection agencies, credit card companies, and more. The partners provide information about borrowers. The arrangement works well for both parties — credit bureaus get the information they need, and businesses that use the information need the reports to be as accurate as possible.

The types of information in your credit file could include details about your mortgage, auto loan, credit cards, student loans, balances, and payment history.

For example, let’s say that you have a credit card. Likely, your lender regularly reports your payment information, loan balance, and available credit to at least one credit bureau. Lenders will usually report on all credit accounts.

Beyond direct reporting, a credit bureau can pull information from public records. For example, information about evictions, tax liens, foreclosures, bankruptcies, and lawsuits would be available through court records.

What’s in a Credit Report?

Once a credit bureau has the information, it puts the details into a credit report which can include the following:

  • Account information: What types of accounts do you have?
  • Payment history: Are you making on-time payments?
  • Credit utilization: How much of your credit limit are you using?
  • Credit limit: How much debt do you have access to?
  • Bankruptcies: Is there a bankruptcy in your past?

Depending on your credit habits, there may be other information, such as tax liens or debt collections listed on your credit report.

Are credit bureaus regulated?

With all of the sensitive information gathered, it’s understandable to wonder how these reporting agencies are regulated. The Fair Credit Reporting Act (FCRA) governs the entire consumer credit reporting industry, including credit bureaus.

Thanks to FCRA, credit bureaus have to adhere to strict rules, including:

  • Collect accurate information: Credit bureaus are required to make sure that the information they collect about you is accurate.
  • Accept disputes: If the information is not accurate, the credit bureau has to give the consumer a chance to fix a mistake. If you dispute any information on your credit report, the bureau will need to verify, correct, or remove the information promptly.
  • Provide access to free credit reports: Credit bureaus are required to give you a free report once a year.
  • Stick to a time limit on negative information: Most bad spots on your credit report can only stay there for seven years. For example, amounts moved to collections must be removed after seven years.

Since so much information flows through each credit bureau, it is expected that some mistakes will be made along the way. As a savvy consumer, it is important to take advantage of the opportunity to correct any mistakes.

So, checking your credit report on an annual basis is a smart move. You can get a free copy of your credit reports through AnnualCreditReport.com.

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How Are Credit Reports Used?

Credit reports can include a large amount of financial information. But how is this compilation of information used?

Credit bureaus can use the information to calculate credit scores and sell the details to interested parties with a legitimate business reason. Here’s a closer look at both uses.

Credit bureaus and credit scores

Your credit score is based on the information found in your credit report.

One of the most widely accepted credit-scoring models used is the FICO Score. That’s because this credit score is used by 90% of U.S. lenders. This scoring model includes new credit inquiries, payment history, credit mix, length of credit history, and amounts owed.

Each credit reporting agency can use slightly different credit scoring methods to arrive at your credit score. But even when using the same model to determine your credit score, one credit bureau may come to a different score than the next. That’s because each of these credit-reporting agencies operates separately.

Although each has the goal of creating the most accurate credit report possible, some credit reports may be more accurate than others. If a credit bureau is missing information about your finances, then the credit score they provide might not be entirely accurate.

Who Can Look at Your Credit Report?

On the surface, it may seem that potential lenders are the only ones with a reason to look at your credit report. That’s because most of us need help from a lender when making a major purchase.

After all, saving up for an entire home purchase or vehicle purchase isn’t necessarily feasible. When you apply for a loan, the lender will likely turn to a credit bureau for more information about your finances.

But lenders aren’t the only organizations that might want to take a peek at your credit report. According to the Fair Credit Reporting Act, anyone with a ‘legitimate business need for the information’ can pay to look at your credit report. A few examples include:

  • Utility and cell phone companies: These businesses may want to look at your credit history before agreeing to work with you.
  • Prospective landlords: Before letting you move in, most landlords want to confirm that you don’t have any prior evictions. Plus, many wish to verify your income can support the rental.
  • Prospective employers and current employers: You have to grant the employer permission to look at your credit report.
  • Insurance companies: An insurance company may look at your credit report as a part of determining your premiums.
  • Government agencies: If you apply for government benefits, the agency might check your credit report to confirm your eligibility.
  • Financial institutions: If you want to open a checking account, most banks and credit unions will confirm that there isn’t a trail of red flags in your banking past.

Any business that needs to look at your credit report can request it from a credit bureau. In some cases, you may need to provide permission for this comprehensive look at your personal finances.

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Credit Bureaus Can Affect Your Financing Choices

Credit bureaus have tasked themselves with pulling together as many of your financial details as possible. Depending on what they find, this information could be used to determine a good credit score — or a bad one.

As a consumer, you have the right to monitor your credit bureaus’ fact-finding mission. Don’t assume that the agencies have found the correct information. Instead, double-check their work!

The Consumer Financial Protection Bureau (CFPB) recommends checking in on your credit report at least once a year. When checking your credit report, ensure everything is accurate. If there is inaccurate or missing information, it’s important to reach out to the credit bureau. Fixing the mistakes will lead to a more accurate credit report and a potentially higher credit score.

When you apply for financing or want to move into a new apartment, your credit report will likely come into play. Regularly monitoring your credit report through the appropriate bureaus can help you avoid any major surprises down the line — like an inaccurate payment history that is pulling your credit score down.

Check Your Credit Score To Protect Creditworthiness

Credit bureaus can report good things about your creditworthiness to potential lenders for those managing their obligations and personal finances responsibly. That could lead to lower interest rates and quick approvals. But if you aren’t making on-time payments or pushing your credit limits, the bureaus will report a less rosy picture to a lender.

Don’t be intimidated by credit bureaus. These large organizations have tons of personal information about your finances. But you still have plenty of power through the Fair Credit Reporting Act.

If you spot mistakes on your credit report, it is essential to report errors immediately. Remember, the credit bureaus are legally obligated to resolve the issue. So, don’t be afraid to speak up!

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About The Author


Sarah Sharkey

Sarah Sharkey is a personal finance writer who loves diving into the details to help readers make savvy financial choices. She has written for numerous finance publications, including Business Insider, Smart Asset, and Money Under 30. She lives in Florida, with her husband and dogs, and enjoys exploring a new stretch of coastline whenever she can.


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