This means understanding how credit reporting agencies work. There are several credit bureaus in the U.S., but most consumers concentrate on the main three: Experian, TransUnion and Equifax. Credit reporting agencies are public, for profit companies, and none are federally owned.
However, the Fair Credit Reporting Act enacted by congress does detail how all these bureaus should operate, which in turn helps to ensure that your credit score is fairly compiled and reported to various lenders.
How Credit Reporting Agencies Work
Credit bureaus are companies that collect information on consumers, and then sell the report to businesses. This can include,
- financial institutions
- credit card companies
Along with any other business where you might have an account or apply for financing, including Buy Here Pay Here Lots
The type of information gathered can vary slightly depending on the credit reporting agency but most will look for,
- Own or rent
- Type of job
- Payment history
- Amount of current debt
- Repossession or bankruptcy
The agencies then use this information to create your credit report and score. Since your credit score will affect everything from your chances for approval to interest rates, you want to keep an eye on it.
You are entitled to three free credit reports every 12 months. One from each of the 3 major credit reporting bureaus. Financial experts recommend spacing these reports out, instead of requesting all 3 simultaneously. This will allow you to watch your credit score without having to pay for it. You can request your free credit report at AnnualCreditReport.
They do not make any decisions, this is entirely up to the company that requested your credit report.
Credit Reporting Bureau Differences
All credit bureaus, including Experian, Equifax and TransUnion operate separately, and do not share information with each other. It is also up to your creditors which agency they report to. Some may only report your information to one, while others may send it to all three. This means that your financial history can vary from one credit bureau to another.
Often potential lenders only request one report so it is important that you pay attention to all three.
If you find an error on your credit report you can dispute it. Simply contact the credit bureau that issued the report. It will take some time, but it will be worth it when you see the black mark removed and your credit score rise.
While you do have to contact each credit reporting agency separately regarding errors and security freezes, you only have to alert one if you are placing a fraud alert. Legally, the various agencies must communicate this to each other.
You can contact the credit bureaus at the following,
Experian – www.experian.com
P.O. Box 2104
Allen, TX 75013-0949
1-888-EXPERIAN (397-3742)
Equifax – www.equifax.com
P.O. Box 740241
Atlanta, GA 30374-0241
1-800-685-1111
TransUnion – www.transunion.com
P.O. Box 1000
Chester, PA 19022
1-800-916-8800
What About FICO?
Consumers often mistakenly believe that FICO is both a credit score and reporting agency. This is not true.
FICO scores do range from exceptional to poor, just like credit scores, and are used by lenders to determine their risk in approving your loan.
3 Facts You Need to Know
There are three facts every consumer should know about credit reporting agencies. Knowing what they can and can’t do will make it less frustrating when you are trying to navigate through the system.
- Each credit bureau creates its own report and score.
You have three different credit reports and scores. If you want a complete picture of your financial history, you need to know what is contained in each one.
- Credit agencies are not legally required to give your score for free.
While it is true that you are entitled to one free credit report annually from each of the three major reporting agencies, they do not have to provide you with your credit score. Most will provide you with it once a year if requested, but they are not legally required to do so. There are some online sites that you can sign-up with that will give your credit score for free, but it is important to ensure that the company is reputable. One often recommended and advertised is Credit Karma.
- Know which credit bureau to contact when there’s an issue.
- If you are disputing an error on your credit report, you need to contact the agency that created it.
- When you suspect fraud, contact any reporting agency. Legally, they must notify the others as soon as a fraud alert is placed.
- Credit freezes requires you to contact each of the three credit reporting agencies separately. It will take a little time, but it will be worth it to prevent any drops in your credit score.
This is important whether you are trying to rebuild it, have a good FICO score or just starting to create a credit history.