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Equifax, Experian, and TransUnion are the top three credit bureaus in the U.S. They are private businesses that collect and sell data on the spending and borrowing habits of individual consumers. The data is compiled into a credit report on every individual, with a score that rates the individual’s creditworthiness on a scale that ranges from “poor” to “excellent.”
Whether an application is approved for a credit card, mortgage, car loan, or lease depends mainly on a person’s credit rating with one or more of the three major credit bureaus.
Key Takeaways
- The three major credit reporting bureaus in the United States are Equifax, Experian, and TransUnion.
- They compile credit reports on individuals, which they sell to prospective lenders and others.
- The credit reports from the three bureaus can contain different information, depending on the information provided by creditors.
- Your credit score is derived from information in your credit reports.
- Credit reporting bureaus differ from credit rating agencies, which evaluate the finances of companies and countries.
What Are Credit Bureaus?
Credit bureaus compile credit histories on individual consumers, primarily as a way for prospective lenders to assess their creditworthiness. Other businesses, such as prospective employers, landlords, and utilities, may review your credit history to determine whether you have responsibly paid your debts on time and in full.
Credit Scores from Credit Bureaus
Although credit scores from credit bureaus may vary slightly, credit scores are always three-digit numbers, typically from 300 to 850.
Your credit score is a numerical representation of your credit history, demonstrating how well you’ve managed your past and present debts. Credit scores are derived from information in your credit reports, including the following:
- Payment history, such as the number of late and on-time payments
- Amount of debt outstanding
- Length of credit history
- Credit mix, such as loans and credit cards
- Number of recent applications for new credit
Lenders and creditors use the overall score and the details in the credit report to determine whether the person qualifies for additional credit, how much credit to extend and the interest rate on the loan, credit card, or line of credit.
Regulation of Credit Bureaus
Credit bureaus are regulated under the federal Fair Credit Reporting Act (FCRA), which defines how they may collect, disburse, and disclose consumer information.
The bureaus rely on information supplied by the banks, finance companies, retailers, and sometimes landlords with which you do business.
The Top 3 Credit Bureaus
In the U.S., the top three consumer reporting bureaus are Equifax, Experian, and TransUnion. This trio dominates the market for collecting information about consumers in the credit markets.
Equifax
Based in Atlanta, Equifax has about 15,000 employees and operates in 24 countries. In the U.S., it is dominant in the Southern and Midwestern states. It claims to be the market leader in most of the countries where it has a presence.
Experian
With domestic headquarters in Costa Mesa, California, Experian originally handled reports only for the Western U.S. The firm now employs about 21,700 people in 30 countries and has its corporate headquarters in Dublin, Ireland.
Transunion
Chicago-based TransUnion, founded in the 1960s, has regional offices in Hong Kong, India, Canada, South Africa, Colombia, the United Kingdom, and Brazil and employs over 10,000 people.
How the Credit Bureaus Collect Information on You
All three credit bureaus collect the same basic information about consumers. This includes personal data such as name, address, Social Security number, and date of birth. It also includes credit history, including debts, payment history, and credit application activity.
Lenders will typically report payments that are at least 30 days overdue to one or more of the credit bureaus.
How Overdue Bills Are Recorded
If you are delinquent in making a student loan payment, Sallie Mae, for example, may report that to a credit bureau, usually when it is 45 days late. Federal loans provide more leeway, allowing 90 days to pass before the loan servicer will file a report of a delinquency.
Not all lenders report credit activity to every credit bureau, so one bureau’s credit report can differ from another credit bureau’s. Even when lenders report to all three bureaus, their information may appear on credit reports at different times simply because the bureaus compile data on different schedules.
Outstanding Tax Bills to the IRS
The Internal Revenue Service (IRS) doesn’t report income tax payments or overdue taxes to the bureaus. However, if a taxpayer does not pay their tax debt within a reasonable amount of time or owes substantial back taxes, the IRS might file a federal tax lien (a legal claim against a taxpayer’s property) with the local county clerk’s office. A tax lien filing is considered public information, and the bureaus can find it through third-party research.
You are entitled to free copies of your credit reports from all three major bureaus at least once a year. You can request them at the official website for that purpose: AnnualCreditReport.com. If you find any errors, you have a right to challenge them, and the credit bureau is required to investigate.
How Lenders Use Credit Reports
Suppose you apply for a loan, line of credit, or credit card from a bank or other lender. That lender will almost certainly perform a credit check, requesting a report on you from at least one of the three major credit bureaus.
Most lenders refer to only one report from a single credit bureau to determine an applicant’s creditworthiness. Mortgage companies are among the exceptions. A mortgage lender examines reports from all three credit bureaus because of the large amount of money involved.
All of these credit inquiries are noted on your credit report from the bureau that receives the inquiry. At least in the short term, the inquiry itself can affect your credit score, as it reflects your intention to access additional credit.
The information in your credit reports is used to calculate your credit score. The two major credit-scoring companies are FICO (formerly Fair Isaac Corp.) and VantageScore. Their scores are calculated based on proprietary models and can differ based on the type of loan for which you are applying.
Credit Rating Agencies vs. Credit Bureaus
Credit bureaus and credit rating agencies are not the same thing. Credit rating agencies collect information on the credit histories of companies and governments, not individuals. The information is used to rate the creditworthiness of companies and governments that seek to borrow money by issuing bonds or preferred stock.
The major credit rating agencies are Fitch Ratings, Moody’s, and S&P Global. These agencies research and analyze a firm’s financials and assign it a corporate credit rating. The ratings are intended to provide investors with information about the financial stability of issuers of debt-based investments. The agencies also rate the debt obligations and fixed-income securities that companies issue.
A.M. Best, another major rating agency, focuses on the insurance industry. Credit ratings are issued in the form of letter grades, such as AAA or CCC so that investors can quickly gauge the level of risk in a debt instrument. The ratings differ among the three major agencies, so it is important to understand which one is providing the letters.
Credit ratings are based on many variables, ranging from business attributes to underlying investments, but all are designed to judge the likelihood that a borrower will be repaid.
Which of the 3 Credit Bureaus Is the Best?
Of the three main credit bureaus (Equifax, Experian, and TransUnion), no particular bureau is considered better than another. A lender may rely on a report from one bureau or all three bureaus when deciding whether to approve a loan.
Which Bureau’s Credit Report Is Most Accurate?
Each of the three credit bureaus may collect slightly different information, depending on which of your creditors reports your transactions to them.
Inaccurate or incomplete information may show up on one, two, or all three of your reports, which is why it’s helpful to check them periodically, especially if you are about to apply for a major loan such as a home mortgage.
What Information Is Not in My Credit Report?
Your credit report does not include your marital status, medical history, buying habits, income, bank account balances, criminal record, or level of education. The report itself does not even include your credit score.
There are numerous ways to obtain your credit score free of charge. You can also sign up for free credit monitoring services from Credit Karma or Credit Sesame. Some credit card companies display your score on demand when you sign onto their websites. The information may be weekly rather than up-to-the-minute, but it’s good enough for a routine check.
The Bottom Line
The top three credit bureaus in the U.S. work similarly providing information on individuals to creditors. However, there can be differences in their credit reporting methods and the information supplied to them by creditors.
If you are applying for credit, consider obtaining copies of your credit reports beforehand and reviewing them for errors.
