What You Need To Know About the Credit Bureaus
Posted by: Staff Writer | Jul 15,2007
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A credit bureau is a company that receives and sells information on people. In this case, the information has to do with financial matters. Experian, Equifax and TransUnion are the three major credit bureaus in the U.S.
They receive information from many places: Public records, businesses and all the financial institutions send them information on everything having to do with finance and credit. For example, bankruptcies, liens, installment loans, mortgages and utility bills all appear.
Then they take this information and assemble it so that they can sell it to businesses that want to decide how trustworthy or creditworthy a customer is.
Do the Credit Bureaus Give Us Grades?Yes. It's called a credit score. Sometimes it's referred to as a FICO score.
FICO stands for Fair, Isaac and Company. They were among the earliest in the assessment of consumer credit. They came up with a system that weighs areas such as credit history and debt-to-asset ratios to help classify your likeliness to repay your debts.
If you have a score of 720 or above, you're considered to be in the top tier of good credit. If your score is less than 620, then you're considered to be a sub prime borrower. This means you will probably still be able to find people who will give you credit, but not a very good interest rate.
Do All Three Credit Bureaus Have the Same Information?They mostly will, but because their collection methods differ, it is not uncommon for different bureaus to have different information. However, be forewarned, none of the bureaus take into consideration factors like sickness or divorce. Your credit score is a mechanical calculation.
Will All Three Credit Bureaus Send Me My Information? They are required by law to send you one free credit report a year. Many financial advisors suggest you ask once every four months from one of the three companies. That way you can keep an eye at what kind of information is being reported about you. Also, it could help you catch identify theft.
Go to www.AnnualCreditReport.com or call toll-free, 1-877-322-8228. You can also receive a free report by mailing a request to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Is There Any Difference Between the Three Credit Bureaus?Nothing substantial. There are differences in the way they collect the information and they way they score a customer, but ultimately their scores tend not to show great discrepancies.
As far as one bureau being better or worse than another is, it's largely a matter of opinion. All three have websites and all three will sell you products, such as credit report inspections.
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