What are The Credit Reporting Agencies and What Do They Do?

  • By David Lukic
  • Feb 15, 2021

 In the U.S., there are three major credit bureaus (Equifax, TransUnion, and Experian), and they collect data about your open accounts, credit history, and overall creditworthiness. They use this information to calculate your credit score and then put together credit reports to help lenders make decisions about you. These credit bureaus are sometimes called credit reporting agencies (CRAs).

Although those three major credit reporting agencies are not the only ones out there, they are the big three that most lenders use. They are also in competition with one another, and the reports they have on you may vary depending on how they calculate good vs. bad credit.

Credit Reporting Agencies

Equifax

Equifax has been around a long time. It was founded in 1899. Considered one of the top agencies, the Equifax data breach in 2017, which affected more than 143 million people put a good-sized dent in their reputation. Since then, Equifax has been offering services to help protect consumers' identities. They offer both FICO and VantageScore credit scores. 

Experian

Experian’s roots date back to 1827 in London when it was originally called 

The Manchester Guardian Society. This early credit reporting bureau shared information about consumers who did not pay their bills. The modern-day Experian uses the FICO 8 credit scoring system to determine credit scores. 

TransUnion

TransUnion was originally a holding company for a tank car company and then later expanded into credit reporting. This company also offers tools to help consumers avoid identity theft. 

Who Owns The Credit Reporting Agencies?

Credit Bureaus

All credit reporting agencies must follow laws stipulated in the Fair Credit Reporting Act (FCRA). Additionally, they are monitored and overseen by both the Federal Trade Commission and the Office of the Comptroller of the Currency

What Do Credit Reporting Agencies Do?

The Three Credit Reporting Agencies

Credit reporting agencies collect financial data and credit information about each U.S. consumer. They collate, compile, and run algorithms on the data to determine a creditworthiness score. They then sell these reports to financial institutions, banks, credit unions, credit card companies, and other lenders. When you apply for a credit card or loan, your lender will contact the credit bureau they have an agreement with. They review your credit report and history to determine if you are a good risk to lend money to. Although credit reporting agencies offer this information up to lenders, they do not make any decisions regarding credit or approval. 

How Do The Credit Bureaus Get the Information?

In some cases, credit card companies, banks, and mortgage lenders supply the information to the credit reporting agencies. In other cases, they may have to buy the data from the institution. For example, information on bankruptcies and tax liens may have to be purchased from a third-party or government source. Other information like fraud alerts is shared among all three credit bureaus. 

Who Can View Your Credit Report?

Three Credit Bureaus

Typically, any type of lender who will be offering you credit or loaning you money can review your credit report as part of the approval process. If you provide permission, landlords and employers can also get a copy. You are entitled to a free copy of your own credit report once a year from all three agencies. You can get a copy easily by going to AnnualCreditReport.com or calling 877-322-8228. You can also contact each credit reporting agency directly for a copy.

Review Your Credit Report Once a Year and Dispute any Errors

What do credit reporting agencies do

It is an excellent practice to review your credit report once a year and look for any errors. Since the information may come from various sources and three companies are collecting that data, there may be inconsistencies or inaccurate information that you will want to clear up before you apply for a car loan or mortgage. 

To dispute any errors on your credit report, contact the credit reporting bureau, and by law, they must initiate an investigation. Each year consumers discover 40 million errors on their credit reports, and about half of them are pretty serious. You can contact each agency below:

Equifax - 800-685-1111, or by mail at P.O. Box 105788, Atlanta, GA 30348-5788.

Experian - or in writing at P.O. Box 9554, Allen, TX 75013, or call 888-EXPERIAN (397-3742).

TransUnion – by mail at P.O. Box 2000, Chester, PA 19016, or by calling 800-909-8872.

Fraud Alerts and Credit Freezes


Some ways you can protect your credit report, especially if you have been the victim of fraud or identity theft, are fraud alerts and credit freezes. A fraud alert posts a notice on your credit report so that the lender must take extra steps to verify it is you before extending any credit. This way, no one can impersonate you and open new credit cards or loans. With a credit freeze, you actually lock up your credit report so it cannot be viewed until you remove it. All three agencies offer both services for free.

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