What Are Credit Bureaus?

You might have heard of the three credit bureaus: Experian, Equifax, and TransUnion. But do you know exactly what they do?

No matter where you are on your credit-building journey, having a greater understanding of credit bureaus and the concept of credit as a whole can be useful. So what are credit bureaus, and why do they matter? We’ll take a closer look.

What are credit bureaus?

If you’ve ever read through your credit report, you may have been surprised at the level of detail it contained. You may also have noticed how quickly things like credit card applications or missed payments appeared on the report. 

Did you wonder who gathered this information? 

Credit bureaus did. These are private companies that collect and update financial information about consumers. The credit scores and credit reports they produce have a big effect on people in many ways. 

Notably, although credit bureaus are responsible for putting together credit reports, they do not make any lending decisions themselves. When a lender is trying to decide whether to offer you credit or not, it will likely purchase a copy of your credit report from a credit bureau before making that decision.

How do credit bureaus work?

Credit bureaus, which are also called “consumer reporting companies” or “credit reporting agencies,” compile financial data from a variety of sources:

• Banks
• Credit card companies
• Mortgage lenders
• Loan servicers
• Credit unions
• Collection agencies

These sources are called “data furnishers” because they send financial data to the credit bureaus. Most data furnishers send this data each month.

Credit bureaus maintain detailed files on each person in their systems, and they update these files when data furnishers send information.

What are the three major bureaus, and how did they come to be?

You might think that credit reporting would be less complicated if there were only one credit bureau instead of three. In the early days of credit reporting, however, there were many more than that. 

At first, most reporting was done by local agencies. Over the years, these companies gradually merged and consolidated. Eventually, there were only three.

What are the three credit reporting agencies, and how are they different from each other? Here’s a quick introduction.

Experian

Experian is the largest of the credit bureaus. It’s a multinational company headquartered in Dublin, Ireland, but it operates in more than 100 countries. It was founded in 1980.

Equifax

Equifax is the oldest of the three main credit bureaus. It was founded in the United States as the Retail Credit Company in 1899, and it rebranded as Equifax in 1975. Although Equifax doesn’t operate in as many countries as Experian does, it has begun expanding into the international space.

TransUnion

If the name “TransUnion” sounds more like something related to transportation, you’re not far off. TransUnion was founded in 1968, but it didn’t start as a credit bureau. Instead, it was originally the parent company for a railcar-leasing business.

TransUnion’s move into credit reporting didn't happen until the following year, when it acquired a local credit bureau. Today, the company is one of the biggest credit bureaus in the United States and Canada. It also has a presence in several other countries.

Do all credit bureaus have the same information?

All three credit bureaus collect information from data furnishers, so you might think that each one reports the same things. 

This is not the case. There are several reasons why your credit score and credit reports might vary across the three credit bureaus.

Incomplete reporting

Incomplete reporting is a major factor in the differences between credit bureaus, and if you’re trying to build your credit, it can be frustrating. Some data furnishers report to only one or two credit bureaus. This means that some of your accounts may not be on record with all three bureaus.

If you’re trying to improve your credit score and want to make sure your efforts pay off everywhere, check out Kikoff. We report every payment to all three credit bureaus.

Different reporting schedules

Data furnishers often send information to different bureaus at different times. If you check your credit report across all three bureaus, the information might be more current at one bureau than at the others.

Different scoring

Credit bureaus calculate credit scores slightly differently, so there can be some variation even if all three bureaus are working from the same information.

How do I monitor my score with each bureau?

Keeping track of your score across all three credit bureaus can be a hassle. However, if you’re serious about building your credit and achieving financial wellness, it’s very important. 

When you apply for credit, you never know whether a lender will check your score with one bureau or all three. And if one bureau has somehow gotten incorrect (and potentially damaging) information, you want to do whatever you can to rectify it.

Fortunately, there are several different ways you can monitor your score at all three bureaus.

Signing up with bureaus directly

All three bureaus provide periodic free credit score updates when you sign up for a free account. Each one also offers a paid option that lets you monitor your credit more closely and access more tools.

Using AnnualCreditReport.com

This official website allows you to request free credit reports from all three bureaus via email. While monitoring your credit score is important, you should periodically read through your full credit reports. If you see any incorrect information, you can take steps to dispute it as soon as possible.

Using third-party apps

There’s no shortage of credit-monitoring apps. Some are free and provide data from one or two bureaus. Paid options usually offer more extensive resources and show you scores from all three bureaus. 

Want to start building credit with all three bureaus?

Unfortunately, not all lenders report to all three credit bureaus. When you make on-time payments or take other steps toward building your credit, we believe you deserve credit for it.

That’s why we started Kikoff. Kikoff is a credit-building platform for people with limited, poor, or no credit history. 

Whether you’re paying off purchases from the Kikoff store (with a free plan) or making rent payments (with one of our upgraded plans), we make sure each payment is reported to all three credit bureaus. Get started with us for free today (click here)!