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Learning a little about how credit bureaus work can help you understand your credit overall.
The three major consumer credit bureaus are Equifax, Experian and TransUnion. A credit bureau is a company that gathers and stores various types of information about you and your financial accounts and history. They draw on this information to create your credit reports and credit scores.
These three big credit bureaus are often grouped together. But they’re separate companies that compete for the business of creditors, who may use the credit reports and scores from these bureaus to help them make lending decisions. And they’re not the only three bureaus out there, either.
Keep reading to learn how credit bureaus get the information they use to create your reports and scores, and how you can go about contacting them if you think something’s wrong.
What does a credit bureau do?
A credit bureau uses the information it has gathered about you to generate a credit report. The credit bureau may also use the information on your report to calculate a credit score for you.
Your credit reports may be used by creditors, such as a company that issues credit cards, when they’re considering whether they will open a line of credit for you. As a consumer, you can request your credit reports from the bureaus for free once a year.Keep reading: How to build credit from scratch
How do credit bureaus get your information?
The data that the bureaus collect come from a variety of sources.
- Information reported to the bureaus by creditors. Creditors, such as banks and credit card issuers, may report information about their accounts and customers to the credit bureaus. In this context, the creditors are known as “data furnishers.”
- Information that’s collected or bought by the bureaus. For some types of information, the credit bureaus buy the data. For example, a consumer credit bureau might buy public records information from LexisNexis, another credit bureau, and use this information when generating your credit report. Examples of information that a credit bureau may buy include government tax liens or bankruptcy records.
- Information that gets shared among the bureaus. Although they are competitors, sometimes the credit bureaus must share information with one another. For example: When you place an initial fraud alert with one of the bureaus, it’s required to forward the alert to the other two.
Why might your credit reports and scores be different depending on the bureau?
If you look closely at your credit reports, you may notice some differences. One reason for this could be because creditors aren’t required to report information to the credit bureaus. Some may choose to report your account to only one or two of the bureaus, or to not report it at all.
Your credit scores could also be significantly different depending on which report your score is based on. This may be because of the potential differences in the data that make up each report.Read more: Why credit scores differ between credit reporting agencies
Other important credit bureaus
Equifax, Experian and TransUnion may be the big three, but there are actually many consumer credit bureaus. The Consumer Financial Protection Bureau has a list of dozens of consumer credit bureaus organized by the type of information they organize and provide.
Check out the CFPB’s list to find the website, phone number and address for each of the credit bureaus, as well as brief descriptions of what they do and whether they provide a free report to consumers. Many do, but sometimes you need to call or mail in your request.
Here are three other credit bureaus you may want to know about.
- ChexSystems: ChexSystems collects and reports information on closed checking and savings accounts.
- National Consumer Telecom and Utilities Exchange: The NCTUE collects and shares information for the telecommunications, pay TV and utility industries.
- C.L.U.E.: Owned and operated by LexisNexis®, Comprehensive Loss Underwriting Exchange collects insurance-related information and creates consumer auto and personal property reports. An insurance company could use these when setting your insurance premiums.
How to dispute inaccurate information on your reports
Consumer credit bureaus have to give you a copy of your report if they have one (in some cases, there might not be enough information to create a report). Often you can get a free report once every 12 months and additional reports for a fee, currently $12.
You also have the right to dispute inaccurate information in your reports and with data furnishers. Under the Fair Credit Reporting Act, the consumer reporting company and the company that furnished the information to the credit bureau must conduct a free investigation to verify the information and correct a mistake, if they find one.How to dispute credit report errors
Credit Karma members can dispute information in their TransUnion credit reports with Credit Karma’s Direct Dispute™ tool.
You may also be able to dispute information over the phone using the number on your credit report or looking up the most recent number on the credit bureau’s website. However, mail and electronic disputes may be preferable because you’ll have a paper trail.
To dispute information with another credit bureau, visit its website or use the CFPB list to find its contact information. You may need to submit your dispute by mail or over the phone.Keep reading: What to do if your credit dispute didn’t work
There are many different credit bureaus that draw on a wide variety of sources to build your credit reports and calculate your credit scores, which is why your credit reports don’t always have matching information. But if you find an error and file a dispute, under law the credit bureaus must investigate and correct a mistake if they find one.