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You may not know what a credit bureau is, but it probably knows a lot about you — more specifically, details about your financial life.
Credit bureaus are consumer-reporting companies that gather and compile your financial information. They sell that information to lenders, landlords, employers and others who use it to help them decide whether to offer you a lease, loan, job or other financial product.
While there are dozens of consumer-reporting companies across the U.S., many people have heard of the big three: Equifax, Experian and TransUnion. Keep reading to learn more about how credit bureaus work.
Why are credit bureaus important?
Knowing how credit bureaus work can help you understand your overall credit and how to check that the bureaus are sharing the correct information about you.
Credit bureaus, also called credit-reporting agencies, don’t actually make lending decisions — their primary job is to gather information about you. That can include details about open credit lines, such as auto loans, mortgages, credit cards and student loans, and your payment history and monthly balances.
Credit bureaus can also check public records to see whether you’ve had any bankruptcies, civil lawsuits, foreclosure, tax liens or other types of collection accounts. All of this information is put into a statement called a credit report.
Lenders and other entities, such as employers, insurers and landlords, may be able to request your credit reports to help them get a picture of your credit history. But credit bureaus won’t give your information to just anyone. Thanks to the Fair Credit Reporting Act, companies must have a legitimate business reason, called a “permissible purpose,” for requesting your credit reports.
It’s important to check your credit reports regularly to make sure there are no errors about your personal and financial information. This may also help you catch any fraudulent accounts opened in your name. (We’ll get back to checking your credit reports later on.)
What are the 3 main credit bureaus?
The three main consumer credit bureaus are Equifax, Experian and TransUnion. Creditors, such as lenders and debt collection agencies, voluntarily supply the bureaus with consumer account information. Not all creditors report account information to all three bureaus, so your credit reports may not match exactly.
That’s also why your credit scores, which measure how likely you’ll be able to pay the creditor back in time, might vary. A credit score is based on the information in your credit reports, so if that info varies, then so will your credit scores. Credit-scoring companies FICO and VantageScore both calculate credit scores on a scale of 300 to 850. And take note: Industry-specific scores may follow a different scoring scale. A higher score typically indicates that your credit history is pretty positive, and it may show the creditor that you’re more likely than not to pay back your debts.How many credit scores do I have?
What can credit bureaus do?
Credit bureaus must follow the Fair Credit Reporting Act, which outlines several consumer protections. Here are some of the important ones to keep in mind.
- Disputes — If you see an error on your credit reports, whether it’s from a typo or potential identity theft, you can dispute the information. The credit bureau must verify, correct or delete the disputed information, usually within 30 days.
- Negative information — Derogatory marks, such as late payments and civil lawsuits, can only be listed on a credit report for seven years. Bankruptcies may stay on your reports for up to 10 years in some cases. If the credit bureau doesn’t remove the information after this time frame, you can request to have it removed.
- Access to credit reports and credit scores — You can request a free credit report from Equifax, Experian and TransUnion at least once every 12 months. You can also request your credit scores, but you may have to pay for them.
What are some other credit bureaus?
Dozens of consumer-reporting agencies, sometimes called “specialty agencies,” collect different types of information about consumers. For example, some track information about your rental history, like whether you’ve ever been evicted, while other agencies track and report any insurance claims you’ve made.
- National Consumer Telecom & Utilities Exchange — Gathers information about consumer utility accounts, such as connection requests and payment history
- Innovis — Offers credit reports that contain your personal info and credit history
- Experian RentBureau — Tracks rental-payment histories from property owners and makes it available for tenant-screening reporting companies
- ChexSystems — Gathers and reports information on checking and savings accounts
- LexisNexis C.L.U.E., or the Comprehensive Loss Underwriting Exchange — Collects insurance policy and claims information that insurance companies can use when setting your premiums
The CFPB recommends checking your credit reports at least once a year — but you can check your free credit reports from Equifax and TransUnion, along with your VantageScore 3.0 credit scores, anytime with a free Credit Karma account. You can also request a free credit report from each credit bureau every 12 months at AnnualCreditReport.com. And you can request six additional free credit reports per year from Equifax through 2026.
The credit bureaus collect a lot of info about your financial life, but understanding how they work and how to read your credit reports can help you stay on top of your credit.