Credit Reports

What is a Credit Bureau and What Do They Do?

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Highlights
In this article

Highlights:

  • The three nationwide credit reporting agencies, or credit bureaus, receive and compile data about your borrowing and credit payment history. These credit bureaus do not make lending decisions.
  • Credit bureaus receive information from your lenders and creditors.
  • It's important to review your credit reports often to make sure your information is accurate.

You may have heard the term "credit bureau" and wondered who they are and what they do. The simplest answer is that the three credit bureaus — Equifax®, Experian® and TransUnion® — receive and compile data about your borrowing and credit payment history. You may also know the credit bureaus as the 3 nationwide credit reporting agencies (NCRAs). The NCRAs do several things:

  1. Compile information about your borrowing and repayment history, as well as other types of information, from creditors, bankruptcy court records, and other sources. This also includes personal information like your full name, address, and Social Security number.
  2. Provide your credit information, through credit reports to your current and potential lenders, employers, insurers and others who have a lawful reason to request and view your credit reports. Potential lenders and others use your credit reports to get an idea of how risky it may be to lend to you, whether you pay your bills on time and other uses permitted by law.
  3. Provide free weekly credit reports through www.annualcreditreport.com.

Do the three nationwide credit reporting agencies make lending decisions?

A frequent misconception is that the NCRAs make lending decisions. The NCRAs do not make lending decisions. Lenders and creditors use data in credit reports from NCRAs to help them make lending decisions. The decision to deny or approve an application lies with the lender or creditor. Each lender and creditor may have its own criteria.

Where do the three nationwide credit reporting agencies get their information?

Banks, credit card companies, mortgage and auto lenders, debt collectors and others voluntarily send account information to NCRAs. A creditor may not send data to all three NCRAs so your credit reports from each NCRA may contain different information. Creditors generally share updated account information with NCRAs monthly. NCRAs also obtain data from public bankruptcy court records.

What is in an Equifax credit report?

Your Equifax credit report contains the following types of information:

  • Identifying information: This section of your Equifax credit report, which is not used to calculate your credit scores, includes personal information, such as your name, address, Social Security number and date of birth.
     
  • Credit account information: This information is reported to Equifax by your creditors and includes the types of accounts (for example, a credit card, mortgage, student loan or vehicle loan), the date those accounts were opened, your credit limit or loan amount, account balances and your payment history. You may not see all of your credit accounts in your credit reports from each NCRA because creditors may not send data to all three NCRAs. Also, closed accounts will drop off your report after a period of time.
     
  • Inquiry information: Inquiries on credit reports show you who has accessed your credit report and when. NCRAs use two types of inquiries: "soft" and "hard".

    Soft inquiries show when someone checked your credit report for some reason other than an application for new credit. This includes prescreened offers of credit or insurance and times that you check your own credit report. Soft inquiries do not affect your credit scores and are not included in credit reports that are provided to potential lenders and creditors.

    Hard inquiries generally occur when someone checks your credit because you have applied for new credit, like a loan or credit card. Hard inquiries remain on your credit reports for up to two years, and may impact your credit scores. Hard inquiries are just one of the factors that determine your credit scores.
     
  • Bankruptcies: Bankruptcies generally remain on your credit report for seven to 10 years, depending on the type of bankruptcy. A Chapter 7 bankruptcy is visible on your credit report for up to 10 years, and Chapter 13 for up to seven years.
     
  • Unpaid child support and alimony: It's also possible for unpaid child support or alimony payments to end up on your credit report and remain there for up to seven years, even if the account is later paid in full. While paying the account will not remove it from your credit report, it may lessen the impact that the previously overdue account has on your credit score.
     
  • Collections accounts: The type of accounts that can be turned over to a collection agency are credit accounts, and also accounts with banks, retail stores, cable companies, mobile phone providers, doctors and hospitals. Also, a landlord may seek payment by selling your rent debt to a collection agency. The unpaid rent sold to a collection agency can be included in your credit report for up to seven years.

How can I get a free copy of my credit reports?

Create a myEquifax™ account to get free Equifax credit reports. You can also get your free weekly credit reports through www.annualcreditreport.com from each of the three NCRAs.

You can get a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score by enrolling in Equifax Core Credit™. This credit score is a VantageScore 3.0 based on Equifax data. A VantageScore is one of many types of credit scores.

The 3 NCRAs are also required to provide a free credit report if:

  • 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.
  • You believe your credit report contains inaccurate information due to fraud.
  • You've placed a fraud alert on your credit reports.

Why it's important to dispute inaccurate or incomplete information on your credit reports

Reviewing your credit reports helps ensure your information is correct. Information that is inaccurate or incomplete can impact your credit scores. It may even be a sign of identity theft.

If your credit reports have inaccurate or incomplete information, contact the creditor and file a dispute with the NCRA that lists that information. You can also file a dispute with the NCRA that lists the inaccurate or incomplete information. Be sure to check your credit reports from all 3 NCRAs if you find inaccurate or incomplete information on one credit report. You can create a myEquifax account to file your dispute. Visit our dispute page for other ways to file a dispute.

Get your free credit score today!

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