3 Major Credit Bureaus

In the United States, there are 3 major credit bureaus. There are TransUnion, Equifax, and Experian. These three credit reporting agencies are responsible for amassing information on an individual’s credit history. They collect data from a number of sources called data furbishers.

Data furbishers may be creditors like banks or credit card companies, lenders, utility companies, collection agencies, and courts. Creditors and lenders will give TransUnion, Equifax, and Experian information on how much a consumer has borrowed and on how long it takes them to pay back the loan. Creditors and lenders will give the free credit reports from all 3 bureaus monthly updates about whether or not the consumer has paid their monthly bill on time. Most of them, however, only tell the bureaus about a late payment if the borrower makes their payment more than 30 days after the due date.

Utility companies usually only notify the 3 credit bureaus if a consumer is seriously in arrears in their billing arrangement. For instance, if they have to place a lien on a property to get an electric or water bill paid, they may notify the bureaus. However, if the consumer is only a month late, they will typically not submit a report. Collection agencies notify the 3 credit bureaus if a consumer owes a bill that has been placed with their office. However, not all collection agencies report all of their debtors. In addition, if a consumer makes a payment arrangement with a collection agency, the agency will usually not provide TransUnion, Equifax, and Experian with monthly updates on the payment arrangement. They will simply notify them when the bill is paid in full or settled for less than the full balance. The courts notify the agencies about public records.

The 3 credit bureaus create reports on each consumer, and they provide these reports to lenders, landlords and some other interested parties. These are what we call credit reports. These parties will look at the consumer’s borrowing and repayment habits. Then, they will determine whether or not they wish to engage in a financial relationship with that consumer. In addition, these parties may also look at the consumer’s credit score. The score is derived from taking data from the credit report and plugging it into a special algorithm. Using their formula, the 3 credit bureaus work to create a credit score for most consumers. However, the credit score that most lenders and creditors look at is not the one created by the credit reporting agencies. It is the one created by FICO (Fair Isaac Corporation). They are an independent organization that creates these scores using information from all of the reporting agencies. You can obtain a free gov credit report once an year from the 3 bureaus, but you need to pay a fee to obtain your credit score. Whether that’s your credit score from the 3 credit agencies or from FICO, you usually have to pay a small fee.

To ensure that TransUnion, Equifax, and Experian are fair with consumers, they are regulated by two governmental bodies. The Federal Trade Commission provides oversight for the bureaus. The Office of the Comptroller of Currency oversees the entities that provide data to the bureaus, and they try to ensure that the data is correct.

If a consumer wishes to see their credit report, they can contact any one of the 3 credit bureaus. According to the federal law, TransUnion, Equifax, and Experian must all provide consumers with at least one free report per year. In some states, they must provide consumers with a report every time something negative is noted on their report.

Choosing The Right Credit Monitoring Service

Unless you are a person who diligently follows your own credit report, keeping track of every new itemized detail, you will benefit from a reputable credit monitoring service. The thing that seems to have more currency and merit in the lending industry for consumers is a good credit score. Monitoring what creditors report about your purchases and payment habits is the only way to ensure your score stays about 650 so that you have a fighting chance of being approved for a loan.

Credit monitoring agencies can check your credit report as frequently as you instruct them to monitor it. Of course, more frequency equals a higher payment for the company’s services. Some offer daily monitoring for clients who may be in the process of closing on a house or some other large purchase. The company alerts you right away if there is unusual activity or a negative report and offers you fraud solutions if you need them.

A good credit monitoring company will provide you with the following services:

1) Reports from all three major credit bureaus. The reporting for free credit reports from all 3 bureaus is not always synchronized. You could possibly have an unblemished credit report at one bureau and a lowered credit score at another because of some negative activity. The three bureaus are Equifax, Transunion and Experian. Many companies boast that they report from all three bureaus but verify this information with both the company and other clients.

2) Fast, seamless turnaround. How much impact would a credit monitoring service have if it could only issue weekly reports or if it could only get information to you in three to five business days? It would not be very effective at all. The average turnaround time for a good monitoring service is 24 hours.

3) A monthly bill that is less than $20. In fact, it should be no more than $15 per month. If you pay more than this amount, you should double check your itemized statement from the service. Either you are paying for an extra service that you do not know about or the company is charging far too much for its services. Some monitoring services tack on identity theft insurance because it is one of the incentives they offer at the time you become a customer. The problem is they never bother to tell you that this is something you are paying for with your monthly bill.

4) Multiple methods of accessible contact. While much of the contact provided by credit monitoring agencies will be by email or phone, you need to make sure this contact is not constrained by hours of operation or days of the week. Phone support should be 24/7 and email contact should be real-time response. If the company offers online chatting or text message contact, that is certainly a plus.

5) A specific list of what exactly will be monitored. Some agencies publicize their commitment to alert you if your credit report or credit score changes in any way good or bad, but they should also alert you if there is suspicion of fraud or if a new account appears in your name. What they report is vitally important for monitoring.

6) Explanations. Good credit monitoring services not only deliver the news that something has changed on your credit report, but they also tell you why it has changed. The best agencies follow up their explanations with sound advice on how to improve your report or your score.

7) A free credit score trial offer. Giving customers a free trial period is as good as placing a warranty on your services. Companies that choose to do this are solid and serious. Trial periods typically run from seven to 14 days, though some will give customers an entire month to try out services.

8) An option to receive monitoring for either short- or long-term periods. You do not want to be involved with a service that tries to lock you into a contract and gouges you for early cancellation fees. This is not wireless phone service; it’s credit monitoring. Be sure that you can cancel the service when you no longer need it without penalty.

9) Classy marketing. Companies that have to secure customers through spam messages or an e-campaign that feels like a multi-level marketing scheme will probably handle your credit report the same way. Avoid them at all costs.

When you are selecting a credit monitoring service be sure that you move at your own pace. You never want to be rushed into a decision and hastily choose a company because you are afraid of not choosing them. If they offer you the world now, the same world will be up for grabs when you make up your mind.