Credit Reporting Agencies
You’ve probably heard some credit terminology tossed around: FICO, credit bureaus, revolving credit, etc. Most people at least understand the basics of many credit terms and concepts but a particular point of confusion is what are the three credit reporting agencies and what do they do? These agencies, or bureaus, are Experian, TransUnion, and Equifax. Let’s take a closer look at why they exist.
Calculating Your Score
Each of the bureaus collects personal information applicable to your credit use from a variety of companies and institutions, such as banks, mortgage companies, and even utility companies. As the information is collected, it is sorted by the agency into 5 different categories: credit history, types of credit, length of credit, credit utilization, and new credit. The information in these categories make up your credit report and your report is used to calculate your score. The credit report will also show you which areas are pulling your score down and which are bringing it up. It’s important to understand that each agency uses slightly different information and calculates that information differently, so you can’t expect so get the same score from each.
How Is Each Bureau Different?
A great feature on the Experian report is the display of status details, which indicate when an account will no longer be included in your report. This is a helpful feature for anyone with serious negative marks on their report. Experian also shows a balance history for any open accounts and closed accounts that have an outstanding balance.
The employment section in a TransUnion report is the most thorough of all the reports. Although employment doesn’t affect your credit score, having this detailed information here can be helpful when seeking a loan. TransUnion also lists which accounts are satisfactory and unsatisfactory, and it clearly indicates which accounts on your payment history were paid late.
Equifax summarizes open accounts and closed accounts separately, and Equifax is the only agency to do so since the other two agencies list all accounts together. The credit history displayed by this agency is of the past 81 months.
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