What are Credit Reporting Agencies?

A credit reporting agency, also known as a credit bureau, is a company that collects your credit history from various financial institutions and uses this information to create a credit report. There are three main credit reporting agencies in the U.S. – Experian, Equifax, and TransUnion.

What do credit reporting agencies do

A credit reporting agency collects your information from financial institutions, collection agencies, and public records, and uses the information to compile a credit report. Credit reporting agencies sell your credit information to banks, lenders, and other companies, who use it when deciding if you meet their eligibility criteria for something like a loan or credit card.

For instance, when you apply for a new credit card, the lender will review your credit report to assess how you manage your finances. This will help them to decide if they want to extend you credit.

In addition to credit card issuers, there are other entities that can see your credit reports and may use them to inform decisions.

Lenders who may request your credit report include:

• Lenders: Issuers of credit cards, student loans, payday loans, personal loans, car loans, a mortgage, etc.
• Current or prospective employers: For employment screening, but only if you provide written consent
• Government agencies: To determine eligibility for government benefits or licenses
• Landlords: For tenant screening
• Insurance companies: For home, life, or property insurance screening
• Utility companies: When applying for electricity, gas, water, or a new phone

You are also able to request a copy of your report and credit score from a credit reporting agency for your own information. According to federal law, you have the right to a free copy of your credit report every 12 months from the three main credit bureaus. And through December 2022, everyone in the U.S. can get a free credit report each week from the three main credit reporting agencies by visiting AnnualCreditReport.com. Remember, requesting your credit report will not hurt your credit score.

The information contained in a credit report from one of the big three credit reporting agencies can include:

• Personal information: Name, date of birth, address, employer, etc.
• Payment history: From credit card companies, lenders, and other creditors
• Available credit: How much credit you have and use
• Debt information: From debt collectors which can include unpaid medical debt or past due phone bills
• Public information: For example, if you’ve filed for bankruptcy
• Creditor inquiries: A list of creditors that have asked for your report when you apply for credit

The three major credit reporting agencies

You’ve likely heard of the three main consumer credit reporting agencies in the U.S. – Experian, Equifax, and TransUnion.

While each credit reporting agency collects the same type of information, they can get it from different sources. This is because not all lenders report to all three reporting agencies, though many do.

For instance, a lender might only report a credit inquiry to Experian. In this case, this credit inquiry won’t show up on an Equifax or TransUnion credit report. As a result, your credit report and your credit score can differ from one agency to another.

A variation in your credit score can impact whether or not a lender decides to extend you credit. This is why you should review your credit report from all three of the major agencies.

Are there only three credit reporting agencies?

While TransUnion, Equifax, and Experian are the three main credit reporting agencies in the U.S., they are not the only ones. The Consumer Financial Protection Bureau provides a list of many of the consumer reporting agencies available in the United States. The big three agencies provide nationwide reporting, while many of the other, smaller reporting agencies focus on certain market areas or consumer segments.

For instance, some reporting agencies focus exclusively on employment screening, providing background information to employers and non-profit volunteer organizations. Others target tenant information, providing your credit history, past evictions, and criminal background data to landlords and property management companies.

There are also agencies that provide credit information to banks to help them decide if they should offer you a checking account or allow you to cash a check. Medical screening agencies report your medical information to insurance companies (with your consent) to help insurers assess your risk and eligibility.

Other specialized credit reporting agencies monitor and report information in the areas of retail, personal property insurance, utilities, and more. Ultimately, the credit agency used will depend on the type of approval you are trying to obtain.