What is a Credit Bureau?

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  • The three nationwide credit bureaus do not make lending decisions
  • Credit bureaus receive information from your lenders and creditors
  • Regularly reviewing your credit reports is important to ensure your information is accurate and complete

In 2017, Equifax surveyed approximately 1,000 consumers across the United States and found that when it comes to financial literacy and credit, one-third of those surveyed grade themselves a “C.” Credit can be complicated, and because of that, we thought we’d start with some of the basics of how credit works.

Do the three major credit bureaus make lending decisions?

A frequent misperception about the three major credit bureaus is that they make lending decisions. The three major 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 may have 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 major credit bureaus — even if all of your creditors report to all three.

In addition, while many creditors report to all three major credit bureaus, some creditors may report to only two, one or none at all.

What types of information are on a credit 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.

Why are each of the three major credit bureaus required to provide you with a free copy of your credit report?

According to The Fair and Accurate Credit Transactions (FACT) Act, you have the right to one free credit report each year from each of the three major credit bureaus. You can get your free credit reports by visiting www.annualcreditreport.com.  

Credit bureaus are also required to provide a free credit report 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

Why is it important to dispute inaccurate or incomplete information on your credit report?

Regularly reviewing your credit reports is important for many reasons, including ensuring accuracy of your information. Information that is inaccurate or incomplete may not only impact your credit score, but could be a sign of identity theft. In addition, regularly checking your credit reports is a good habit to start.

If you do find information you believe is inaccurate or incomplete, and it is account-related, consider contacting the lender or creditor with whom the account is associated. In addition, you may file a dispute with one of the three major credit bureaus. At Equifax you can file a dispute online, over the phone, or via mail.