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The big three national consumer credit bureaus — Equifax, Experian and TransUnion — are multinational for-profit corporations that collect, organize and sell credit information about consumers. But they have a few other revenue streams as well.
If you have a credit card, student loan, mortgage or another type of credit account, your information is probably in a database at Equifax, Experian or TransUnion — or all three.
Each of the three main consumer credit bureaus has its own data set, products and services, but they generally make money in similar ways.
- Credit reports and data
- Credit data for nonlending decisions
- Data analytics products and services
- Credit-related products
Credit reports and data
The bureaus’ primary business revolves around creating and selling credit reports.
Much of the data that appears on consumer credit reports comes from data furnishers, like credit card issuers, banks and online lenders. These companies send customer and account information to the bureaus for free. The bureaus may also collect public-records data from courthouses and other sources across the country.
In addition, bureaus may gather other data, like rental or utility payment records, which may then be included as part of some major consumer credit reports and scores, or sold along with them.
The credit bureaus then organize and sell credit reports and information. For example, a bureau may sell consumer credit reports to any of the following (note this can vary by state):
- A lender that’s trying to determine if it should approve or deny a loan applicant
- An employer who is considering a job applicant, if the consumer gives permission
- A credit card issuer that’s trying to decide your interest rate
There are also companies that offer access to your credit reports, like Credit Karma. Members can check their Equifax and TransUnion credit reports on Credit Karma for free.
A person or organization must have a “permissible purpose” to purchase a credit report, and applicants generally give the company permission as part of the application process.
Credit data for nonlending decisions
The bureaus also sell credit information about consumers to companies for marketing purposes.
For example, a credit card issuer might create a new credit card and want to send preapproval offers to consumers that meet certain characteristics (like people with specific minimum scores and no recent bankruptcies).
The bureaus can sell credit information without consumers’ permission if it’s used for a firm offer of credit (like a preapproval). But you can opt out of the marketing lists at OptOutPrescreen.com.
Companies also purchase credit reports from the bureaus as part of ongoing account management, perhaps leading to a decision to raise or lower a credit limit based on changes in a customer’s credit reports.
Data analytics products and services
The credit bureaus also offer a wide range of data analytics services. Financial institutions, insurance companies and others may hire a bureau to help them acquire new customers, manage accounts, fight fraud, cross-sell customers and collect on delinquent accounts.
The bureaus also create risk models, and they can help companies create custom risk models.
For example, a creditor may want to create a custom model to predict the likelihood that an applicant will be 90-plus days late on a bill in the next 24 months. FICO and VantageScore credit scores predict the same thing based solely on credit bureau data. But a custom model could incorporate the client’s data and lead to more-accurate predictions for the creditor’s customer base.
Each of the credit bureaus also offers credit- and identity-related products and services directly to consumers.
You may be able to purchase a copy of your credit report along with a credit score — or several scores — from each bureau. Each of the bureaus also has a subscription service that includes identity monitoring and the ability to lock and unlock your credit reports. These services may come with other benefits, such as access to a specialist who can help you deal with identity theft and identity theft insurance.
You may be able to get some of these offerings for free elsewhere.
However, consumers who want daily updated credit reports from all three bureaus and a wide range of credit scores with each report may want to subscribe to a paid service.
The bureaus also make money by selling credit-monitoring and -education products to other companies, allowing the companies to give or sell these services.
The credit bureaus do more than create and sell credit reports. However, credit reporting is a major part of their business, and their other services and offerings also revolve around gathering and analyzing consumer data. Although we focused solely on consumer data in this article, the bureaus offer similar services in relation to business credit reports.