Equifax, Experian, and TransUnion, the top three U.S. credit bureaus, are private companies that collect and sell credit information on individual consumers to lenders and others. While the three bureaus have similar functions, they also have some differences, including in the information they report.
- 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 three bureaus can have somewhat different information in their reports, depending on which creditors provide it to them.
- The information in your credit reports is also used to assign credit scores to you.
- Credit reporting bureaus are not the same as credit rating agencies, which evaluate the finances of companies and countries.
What Are Credit Bureaus?
Credit bureaus are companies that compile credit histories on individual consumers, primarily as a way for prospective lenders to assess their creditworthiness.
The detailed credit reports that they create also provide the information from which credit scores are derived. Credit scores are three-digit numbers, typically from 300 to 850, and they can affect whether you qualify for a loan or a credit card. They can also influence the lender’s decision on the size of a loan and the interest rate that you will have to pay.
Credit bureaus are private companies that are regulated under the federal Fair Credit Reporting Act (FCRA) in terms of how they collect, disburse, and disclose consumer information.
A credit bureau’s business model relies on information supplied to it by the banks, finance companies, retailers, and sometimes landlords with which you do business. The credit bureau compiles that information on you, analyzes it, and sells it to lenders and others.
The Top Three Credit Bureaus
In the U.S., there are a number of different consumer reporting bureaus. The top three are (in alphabetical order) Equifax, Experian, and TransUnion. This trio dominates the market for collecting information about consumers in the credit markets.
- Equifax. Based in Atlanta, Equifax has approximately 14,000 employees and does business in 24 countries. It is especially dominant in the U.S. South and Midwest and claims to be the market leader in most of the countries where it has a presence.
- Experian. With domestic headquarters in Costa Mesa, Calif., Experian originally handled reports for the Western U.S. The firm employs approximately 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 more than 10,000 people.
How the Credit Bureaus Collect Information on You
All three credit bureaus collect mostly 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. It is common practice for the credit bureaus to collect information on federal and private student loans and from housing lenders.
If you are delinquent in making student loan payments, Sallie Mae can report that to a credit bureau—typically after you are 45 days late. Federal loans provide more leeway, allowing 90 days to pass before the servicer will file a report of a delinquency.
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 in a reasonable amount of time, or if they owe a lot of back taxes, then 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.
Note that 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 at different times of the month.
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. However, it does not have to use all three.
The lender might have a preferred relationship or value one credit reporting system over the other two. 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, but they only show up for the bureaus whose reports are pulled. For example, if a credit inquiry is only sent to Experian, then Equifax and TransUnion do not know about it.
The information in your credit reports is also used in calculating 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 sometimes confused. They are not the same thing, although credit bureaus are also called credit reporting agencies. Credit rating agencies deal with companies and sometimes entire countries, not with individuals. They give investors a way to compare the risk-reward potential of certain investments and to gain insight into the financial stability of companies looking to borrow money by issuing bonds or preferred stock.
The major credit rating agencies are (in alphabetical order) Fitch Ratings, Moody’s, and S&P Global. These agencies research and analyze a firm’s financials and assign it a corporate credit rating. Different from credit reports or credit scores, these ratings are intended to provide investors with information about companies and the issuers of debt-based investments. The agencies also rate the particular debt obligations and fixed-income securities that companies issue, as well as insurance companies for financial solvency. 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 look at a debt instrument and gauge its risk. 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, and all are designed to judge the likelihood that a borrower will be repaid.
Which of the three credit bureaus is the best?
Of the three main credit bureaus (Equifax, Experian, and TransUnion), none is considered better than the others. A lender may rely on a report from one bureau or all three bureaus to make its decisions about approving your 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 useful 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 your credit report?
According to Experian, “Your credit report does not include your marital status, medical information, buying habits or transactional data, income, bank account balances, criminal records, or level of education. It also doesn’t include your credit score.” While it isn’t part of your credit report, there are a number of ways to obtain your credit score free of charge.
The Bottom Line
The top three credit bureaus in the U.S. work similarly in that they all provide information on individuals to creditors. However, there are differences in their credit reporting methods and the information that may be supplied to them.
If you are applying for credit, consider obtaining copies of your credit reports beforehand and reviewing them for any errors.