Credit bureaus are companies that can run a surprisingly large part of your life. They make up your credit score, which can affect your ability to get a job, a mortgage, or a car loan. These companies have all sorts of information on you. They know where you’ve lived since you’ve opened your first piece of credit, and they know your social security number. They have information on all the credit you’ve ever had as well as things like bankruptcies and missed payments to your cell phone company.
The question many people as is: Where do the credit reporting companies get all this information?
The truth is that the information comes from a variety of places. There are hundreds or thousands of small local and regional credit bureaus in the United States. These smaller organizations basically spend time gathering information about consumers. They’ll learn things like who is asking about your credit history, how long you’ve had credit, and how much money you owe on your credit cards.
These companies will then sell their information to the major credit bureaus, TransUnion, Experian, and Equifax. These three organizations are the major ones that give out your credit score and credit report to credit card companies, mortgage lenders, and even potential employers. These companies use a specific formula to take all your credit information and compile it into a standardized credit score. This little number can really change your life for the better or worse.
The credit bureaus may also get information directly from your creditors. If you have a credit card with a major company like Visa, your credit information will probably be reported to all three major bureaus every month. Visa will tell them things like your current balance and credit limit as well as whether or not you’re making payments on time regularly. If you miss a payment one month or are a day or two late, they’ll report that, as well.
If you work with some smaller companies, though, they may only report to one of the companies. This is why sometimes one credit score or report may look different from the other two. When you go to check your credit report, you need to be sure that you get all three of them. This is especially true since credit bureaus often make mistakes, and you won’t find the mistakes of the same type on all three reports.