The three major credit reporting agencies (CRAs), also commonly known as credit bureaus, in the United States are Equifax, Experian, and TransUnion. These credit bureaus collect data about your credit behavior and the credit behaviors of more than 200 million other Americans. The CRAs use the information they gather to create credit reports, which they then resell to other businesses.
Let’s dive into how the major credit bureaus get the data they use to create your credit reports and scores, how they use that information and how you can dispute inaccuracies on your reports if needed.
The Big Three Credit Bureaus and What They Do
The “Big Three” is another term associated with the three major national credit bureaus: Equifax, Experian, and TransUnion. All three CRAs are for-profit companies trading publicly and they are not affiliated with the government.
Each of the three credit reporting bureaus collects consumer financial data. This information includes your credit utilization, payment history, and recent inquiries, and is used to create your credit report and calculate a credit score.
Credit agencies don’t make any financial decisions about whether or not you should be offered credit and what terms you should receive. Their purpose is only to offer information and tools to help other businesses and lenders make those decisions.
Credit reporting agencies are overseen by the Federal Trade Commission (FTC) and the Office of the Comptroller of the Currency (OCC). Credit Bureaus must abide by the Fair Credit Reporting Act (FCRA), which is federal legislation that outlines what the credit bureaus can and cannot do. There is an addendum to the FCRA, the Fair & Accurate Credit Transactions Act, which stipulates that each agency must provide you with one free credit report per 12-month period.
Banks, creditors, and other lenders may use your credit report to determine your creditworthiness. In fact, your report and score may be the largest factors a lender considers when you try to buy a home or car.
These agencies also allow you to freeze your credit, which can help prevent scammers from accessing your information and using it to open accounts in your name and ruining your credit.
The Credit Bureaus and Your Data
The CRAs include specific data on your report to help lenders determine your creditworthiness. This data includes financial information such as open and closed accounts, payment history, bankruptcies, foreclosures, and repossessions. Your report will also list personal identifying information, like your name, date of birth, Social Security Number and addresses.
The CRAs may legally share your information with many different types of business, such as:
- Credit Unions
- Retail Stores
- Insurance Companies
- Government Agencies
Credit bureaus acquire your financial information primarily through two different types of partnerships:
- Working with creditors: The bureaus receive important financial information from banks and credit card issuers about their account holders and customers.
- Working with other bureaus: For specific information, the credit bureaus purchase data from other credit bureaus. For example, these bureaus often buy public records information about repossession, bankruptcy filings, and foreclosures. In this case, they may work directly with another credit bureau that specializes in government and public records, such as LexisNexis.
Information gathered by these bureaus will remain on your report for a set period of time. Many items, especially those containing negative information, may remain on your report for seven years.
Here’s a general breakdown of the timeline for some negative information to remain on your credit report.
- Credit Inquiries from Potential Lenders: 2 years
- Late Payments: 7 years from the date of the late payment
- Bankruptcies: 10 years for Chapter 7 filings — 7 years for Chapter 13 filings — 7 years for items included in the bankruptcy
- Closed Accounts: Indefinite if the account was never paid late — 7 years if payment history includes one or more late payments
- Charge-Offs: A charge-off means a lender or creditor writes off the balance of the delinquent debt. It signifies that they don’t expect to be repaid. Charge-offs may stay on a credit report for 7 years.
- Collections: 7 years from the date of the last payment on the original account before it went to collections
- Tax Liens: 7 years from the date of the final lien payment — If the lien is not paid, the mark may stay on the credit report indefinitely
Why Are My Credit Reports and Scores Different?
Your credit reports may have different information which in turn is likely to cause you to have a different credit score from each bureau. Each credit bureau is a separate entity and they don’t have to share information, with the exception of fraud alerts which they are required to share.
Say your bank only has a business relationship with Equifax. In this case, your banking information may only show up on your Equifax credit report. Similarly, your credit card issuer might share information with all three bureaus, in which case your credit card history is likely to show up on all three credit reports.
Can I Dispute Inaccurate Information on Your Reports?
If you notice a mistake on your report, you have the right to dispute it. Contact each credit bureau directly to file a formal complaint in the form of a dispute letter. The FTC provides this sample dispute letter for use with a credit bureau along with detailed instructions to report errors on your credit report.
Each bureau must respond to your complaint. Here is the contact information for the three major credit bureaus.
P.O. Box 105788
Atlanta, GA 30348-5788
P.O. Box 9554
Allen, TX 75013
P.O. Box 2000
Chester, PA 19016
It’s also wise to contact the company that reported inaccurate information. State your complaint in writing and keep copies of the correspondence for your records.
Additional Consumer Reporting Companies
Other credit reporting agencies specialize in specific industries to help creditors and other companies. For example, many different reporting agencies are available for employers to screen potential new-hires or for landlords to screen applicants for their rentals.
Here are a few important credit bureaus:
- TeleCheck and ChexSystems: Both of these agencies provide reports on checking and savings accounts.
- National Consumer Telecom and Utilities Exchange (NCTUE): As its name suggests, this bureau gathers information to share with utility, telecommunications, and TV companies.
- CoreLogic Rental Property Solutions: This company offers tenant screening reports for landlords through its MyRental platform. These reports include payment and eviction history, bankruptcy records and data from credit bureaus.
The Consumer Financial Protection Bureau (CFPB) maintains a list of credit reporting agencies you may want to know about.
The Bottom Line
The “Big Three” credit report agencies, Equifax, Experian, and TransUnion, collect and maintain consumer credit and financial information. They use this information to create credit reports and calculate credit scores, both of which they sell to creditors, lenders and a variety of other businesses.
These credit bureaus are critical for business so they can assess your creditworthiness and minimize their risks. They are important to you because the information they provide is used, in part, to decide whether or not you get a loan for a car or a house or other type of credit.