Credit Bureaus & Scoring
The credit experts at CreditGumbo.com are dedicated to bringing you straight-talk about the, sometimes murky, world of credit reports and credit scoring. Just click on a question below to be taken to the answer.
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Credit Bureau FAQ's
- Who are the credit reporting agencies (credit bureaus)?
- How often should I review my credit bureau report?
- Do I have to review all three of my reports?
- How do I get a copy of my report?
- What is in a credit report?
- Where do credit bureaus get the information they report?
- Who can see my credit report and when?
- Once I get a copy of my report, how do I read it?
- What should I do if I find an error on my credit report?
- Should I pay a company to “fix” my credit report?
- How do I contact the credit bureaus?
Credit Scoring FAQ's
- What is a credit score?
- Why should I care about my credit score?
- What is in a credit score?
- Why do lenders use credit scores?
- Do all lenders use the same credit score?
- What is the FICO score?
- Do all lenders use the FICO score?
- If lenders use so many different credit scores, which one do I have to worry about?
- How can I improve my credit score?
- What is a good credit score?
- How often does my credit score change?
- What can I do to keep my credit score high?
- Will closing my unused credit cards help my credit score?
- Who are the credit reporting agencies (credit bureaus)?
- How often should I review my credit bureau report?
- Planning a major purchase that will require financing, such as a home or a car.
- Applying for a student loan.
- Applying for a new job.
- Purchasing automobile insurance.
- The victim of identity theft (or think that you might be).
- Going through a divorce (it’s a good idea to make sure your spouse is paying on any joint accounts, if that is your arrangement)
- Do I have to review all three of my reports?
- How do I get a copy of my report?
- What is in a credit report?
- Identifying information such as your name, address, Social Security Number and employment information. Lenders collect this information from consumers through the credit card or loan application process and report it to the credit bureaus. You may find variations or misspellings of your name on the credit report. This is because the information is reported to them from many different lenders. Credit bureaus typically keep all of these variations on file so that all of an individual’s loans are appropriately linked in the report.
- Credit card, loan and lease account performance information. This is referred to in the lending industry as “trade data” or “trade lines”. It reflects the payment performance on individual loan accounts. Each trade line may contain data like the date the account was opened, the credit limit, the highest balance ever, the current balance, the current delinquency status, the date the account was closed and information on the payment history on the account. Typically the payment history reflects whether or not the last 12 to 24 months of payments were made on time. Trade lines will also contain information on whether the account is an individual account, a joint account or has an authorized user. Your credit bureau will also contain the contact information for each of the lenders reporting on your report.
- Information about credit inquiries. Each time a lender requests a credit report on an individual, a credit inquiry is posted to that individual’s credit report. The inquiry section of the credit report includes the names of the lenders who requested the credit report and the date of each request. Typically, a report will reflect inquiries made on a consumer over the past 24 months. There are two types of inquiries that may appear. Voluntary inquiries are inquiries made as the result of a credit application or a consumer giving permission to a lender to pull a credit report. Involuntary inquiries, sometimes referred to as “promotional inquiries” occur when lenders review a consumer credit report in order to send a pre-approved offer of credit.
- The final section of the credit bureau report is the public record and collection item section. The credit bureaus capture the public record information from courts. Public record information includes items like bankruptcies, property foreclosures, suits, liens and judgments. In some states, the public record section may also include overdue child support payments. Collection items are typically reported by collection agencies on overdue debts. Items reported in this section of the credit report are typically viewed very negatively by lenders and will typically severely decrease your chances of getting a loan. Most public record information will remain on your credit report for at least 7 years. Bankruptcies may stay on the report for 10 years.
- If you have provided one, your credit report will contain a consumer statement. You may choose to place a consumer statement on your credit report to explain the circumstances of a delinquent account or a public record like a bankruptcy. Some people also use consumer statements if they have been a victim of identity theft.
- Where do credit bureaus get the information they report?
- Who can see my credit report and when?
- Organizations to which you apply for credit
- Insurance companies
- Employers or prospective employers – with your permission
- Landlords or prospective landlords
- Organizations considering sending you firm offer of credit
- Organizations with which you have a loan or a line of credit may obtain credit reports to monitor your credit standing
- Depending on federal, state and local laws, certain law enforcement and government agencies may be allowed to access your credit report
- Any organizations to which you give permission to obtain your credit report
- Once I get a copy of my report, how do I read it?
- What should I do if I find an error on my credit report?
- Should I pay a company to “fix” my credit report?
- How do I contact the credit bureaus?
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Experian
Website: www.Experian.com
Telephone: 888-397-3742
Address: P.O. Box 9595, Allen, TX 75013-9595 -
Equifax
Website: www.Equifax.com
Telephone: 800-685-1111
Address: P.O. Box 740241, Atlanta, GA 30374-0241 -
Trans Union
Website: www.TransUnion.com
Telephone: 800-888-4213
Report ID theft: 800-680-7289
General Address: P.O. Box 1000, Chester, PA 19022
Dispute Address: Trans Union Consumer Solutions, P.O. Box 2000, Chester, PA 19022-2000 - What is a credit score?
- Why should I care about my credit score?
- What is in a credit score?
- Why do lenders use credit scores?
- Do all lenders use the same credit score?
- What is the FICO score?
- Do all lenders use the FICO score?
- If lenders use so many different credit scores, which one do I have to worry about?
- How can I improve my credit score?
- What is a good credit score?
- How often does my credit score change?
- What can I do to keep my credit score high?
- Will closing my unused credit cards help my credit score?
The three nationwide consumer-reporting companies are Experian, Equifax and Trans Union.
The short answer is at least once every 12 months. Under the Fair and Accurate Transactions Act (the FACT Act), you are entitled to receive a free copy of your credit bureau report from each of the nationwide consumer reporting companies once every 12 months. Therefore, there is really no excuse not to look over your credit bureau reports every year. If you have not received your free credit bureau report in the last 12 months, visit AnnualCreditReport.com to get yours now. You will need to provide some basic personal information and you should expect to spend about 20-30 minutes to obtain and print out all three.
While you should review your credit bureau at least once a year, there are circumstances under which it is a good idea to review your credit report more often. Lenders, potential employers and insurance companies are examples of companies that might check your credit bureau report. Therefore, you should know what they might find out and check your own report if you are:
NOTE: If you think your credit may be less than perfect, and you are planning on applying for a loan or mortgage in the next 6 to 9 months, it’s a good idea to review your credit report and FICO score now. The reason for this is that it takes time to repair damaged credit.
While the information contained in each credit bureau is often the same, there can be significant inconsistencies across the three bureaus. Reporting to the consumer credit bureaus is voluntary on the part of the lender. Therefore, a particular lender may choose to report to only one of the three credit bureaus. Also, it is possible to have a mistake on only one of your three credit bureau reports. If that is the bureau that a particular lender chooses to use, this mistake could cost you. For these reasons, it is best to review all three of your credit bureau reports for accuracy.
If you have not received a copy of your credit reports in the last 12 months, you can request a free report from each of the three nationwide credit bureaus by visiting AnnualCreditReport.com. Please note that these free reports do not include credit scores.
If you have already received your reports in the last 12 months or you wish to receive a credit score in addition to the credit reports, you can order them for a fee. There are lots of ways to order all three of your credit reports. If you just want to get them once in a while, you should consider Equifax’s 3-in-1 Report with FICO Score for $39.95. The nice thing about this offering is that it includes all three bureaus and your FICO score. Most other offerings we’ve seen include a variety of other credit scores, but not the FICO score. While not every lender uses the FICO score, it is a widely used and understood risk score. Purchasing all three reports every six months or so is probably enough for many people.
However, if you are trying to build or re-build your credit, are concerned that you may be the victim of identity theft, or are going through a divorce, you may want to consider a Credit Report Monitoring Service. These services vary in their features, but generally provide you copies of all three of your credit bureau reports when you sign up and ongoing monitoring of your credit reports. Our current favorite is Identity Guard. This service will provide you with all three of your reports and credit scores (not FICO score) when you sign up. Each quarter, you will also receive your report from each of the three bureaus and their scores (not FICO score). Additionally, the service monitors all three of your credit reports every business day and notifies you via e-mail if there has been a change. Identity Guard also offers a host of other services to protect your identity. Right now, they are offering 30 days free when you join. Check out www.identityguard.com for more details and to sign up.
While the format of the reports provided by each of the three national credit bureaus differs, they all contain essentially the same types of information. The report may also contain sections that summarize the information. For example, the bureau you obtain may have a summary showing the number of credit cards you have and their total balances.
The five general categories of information captured are:
It’s also important to understand what is not in a credit report. This includes items like driving violations, criminal arrests or convictions and your income.
Credit bureaus receive information from data furnishers. Data furnishers typically include lenders like mortgage companies, credit card companies and auto lenders, collection agencies and courts. Utility companies may also report information to credit bureaus.
The Fair Credit Reporting Act (FCRA) governs the circumstances under which organizations may obtain the credit report of a consumer. Only you and organizations that have a legitimate business reason to access your credit report may access your credit report.
At least annually, you should review your credit report for accuracy. Here are some steps that will help as you look it over.
The first step is to familiarize yourself with the type of information that is contained on your report. (Please see “What is in a Credit Report,” above.) You should then review your report section by section.
Verify that your contact and personal information is correct. There may be variations and misspellings of your name, which are normal and should not raise concern. The personal information section may also include previous addresses and your current employer and previous employers. If there are employers or addresses you do not recognize, you should contact the credit bureau to report this discrepancy.
Next you should review any summary information provided. Summary information that is of particular interest is any information on delinquent accounts. This section will also show the number of credit cards, mortgages, auto loans and other loans as well as the balances on each of these types of accounts. After getting a good overview of what is on your report from the summary sections, you should review each individual trade line, making sure to take notice of the whether the account is opened or closed (if you’ve been using credit for a long time, you may find a significant number of older accounts dating back 10 years or so – just make sure that if you are not using them they either indicate a zero balance or are closed). If there are any accounts you don’t recognize you should use the contact information for the lender that is provided for that lender on the credit report to inquire about the account. If you see any accounts that are being reported as delinquent or having a delinquency in the past that you believe are being incorrectly reported, you should contact the lender as well. In addition to contacting the lender, you can also dispute the item with the credit bureau. This can be done on line on each of the three national credit bureaus’ websites.
Once you have reviewed all of your individual trade lines, take a look at the public record section. Generally anything reported in this section is considered a negative by a bank or lender. Make sure that if there is anything reported in this section that it is accurate. If your report contains any public record or collection trade information that is not correct, you can dispute it by contacting the credit bureau.
Next you can review the credit inquiry section. This section will tell you which companies have reviewed your credit report in the last 24 months. It may include promotional inquiries, or companies who obtained your report in order to make an offer of credit to you. Your bureau may also include a consumer statement. A consumer statement is a written statement that you have chosen to place on your credit bureau.
Experian has a great diagram of a consumer credit bureau that is available here.
If you find an error, there are a couple of steps you should take. First, you should initiate a dispute with the credit bureau that provided the report to you. Each of the credit bureaus has an online dispute process to ease the process. You will be asked what item you are disputing and may be asked for documentation supporting your dispute. If you choose to, each of the bureaus also take disputes through the mail (we recommend certified mail, “return receipt requested”, so that you receive confirmation of their receipt) and on the phone. For contact information, see the credit report you are disputing or “How do I contact the credit bureaus?”
The second step you must take it so inform the information data furnisher, in writing, that you dispute the item. Be sure to include copies of documents that support your dispute. You should call the data furnisher or check your billing statements or the data furnisher’s website to see if they use a special address for disputed items. Again, certified mail with the “return receipt” option is a good idea.
If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
Consumer reporting companies are required to investigate any legitimate dispute. To the extent you provide information in support of your dispute, they must forward that information to the data furnisher. After the data furnisher receives notice of a dispute from the credit bureau, it must investigate and report the results back to the consumer reporting company. If the data furnisher finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file. When the investigation of the dispute is complete, the data furnisher will provide you with the results in writing. You also have the right to a free copy of your credit report. (This free report does not count as your annual free report.) Also, you can ask to have updated reports provided to anyone who received a copy of your report in the last 6 months (up to 24 months for employers). This must be provided free after the erroneous information is corrected. If the investigation of the dispute doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement be included in your file and in future reports. The statement will notify anyone who looks at your report that a particular item was disputed by you.
If you have a legitimate dispute or there is an incorrect piece of information on your credit report, you have the right under FCRA to have it corrected. This is something you should be able to do yourself (see What should I do if I find an error on my credit report?).
There are lots of companies that offer quick fixes for truly damaged credit. Unfortunately, there are no quick fixes for damaged credit. The only way to really improve bad credit is to establish a track record of paying on time and keeping your debt load low. That’s not to say that there are not legitimate debt consolidation companies and credit counseling agencies that can work with you and your creditors to expedite the process, but don’t expect a quick fix.
Virtually all interaction with the credit bureaus can be done on their respective websites. If you wish to contact them, here are their addresses and telephone numbers. While we strive to keep these addresses and telephone numbers up to date, the credit bureaus may change their addresses or telephone numbers from time to time. You may find updated contact information on each credit bureau’s website.
The term credit score refers to a statistical model created to predict the probability that a borrower will not repay a loan as agreed. The score is typically a number that summarizes the information on a consumer credit report, with higher numbers meaning better credit quality.
Credit scores are important to consumers because they are used by organizations like mortgage companies, credit card issuers, auto lenders and insurance companies to make approval decisions and set rates.
A credit score is based on information that is available from the consumer credit reporting agencies (credit bureaus). While the exact formula used to calculate most credit scores is proprietary in nature, credit scores depend on things like the total level of debt, the utilization of a consumer’s credit limits, the length of a consumer’s credit history, the number and types of loans and the number of recent credit applications the consumer has made. The scores also take into consideration things like repossession, bankruptcy and foreclosure, all of which will decrease a consumer’s credit score. Credit scores do not include factors like race, gender, ethnicity, religion, where you live or marital status.
Lenders use credit scores because they provide a convenient way to interpret lots of information that is in a credit bureau report when making a lending decision. They also use them because they work. While the scores will not perfectly predict an individual’s behavior, they are very good at predicting the behavior of groups of individuals.
No. Each lender may use a different credit score. In fact, a lender may use different credit scores for different types of loans. It is not uncommon for a lender to use one credit score for credit cards and a different credit score for mortgages.
The FICO score is a score that is created and sold to lenders by the Fair Isaac Corporation. It is the most well-known credit score and many lenders use it as a component in determining whether or not to approve a loan. While there are many scores used by lenders, the FICO score is a simple way for a consumer to assess his or her overall credit rating. The FICO score ranges from 300 to 850, with higher being better credit quality. According to myFICO.com, the U.S. median FICO score is 723.
No. While the FICO score is probably the most widely used and discussed credit score, there are a large number of credit scores being used by lenders. Large banks typically use a number of scores, some of which they purchase from third parties and many of which they create themselves, in making a lending decision.
While lenders use a large variety of scores, they all typically include the same types of information. While the weighting of the information may vary a bit, they are likely all correlated. That is, if one is going up based on improvements in your credit report, the others are also likely going up. With that in mind, we’d recommend that you focus on a generic score like the FICO score, which you can obtain and monitor through myFICO.com.
If your credit score is low, you can improve it by reducing your debt load and making all of your payments on time.
Because there are many credit scores in the market and they have different score ranges or scales, a “good” credit score is dependent on the scoring system used. Because the FICO score is such a widely used and understood score, you can get a good idea of your relative credit score by visiting myFICO.com. On the site, you can order your FICO score. The site also provides resources for knowing how good your score is relative to the rest of the population.
A credit score changes whenever information on your credit bureau report changes. Because lenders report at various times during the month, your score could change at any time and probably changes frequently. If you are not dramatically changing your payment patterns or debt load or actively applying for many loans or credit cards, your score is probably relatively stable.
There are many steps you can take to keep your credit score high. Here are a few. First, make sure to pay all of your obligations, even parking tickets and utility bills, on time each month. Second, you should keep your total credit card balances to 30% or less of your total credit card lines. Third, don’t shop around for credit by applying for a number of loans or credit cards at the same time.
While a large number of open credit cards may cause some credit scores to be lower, closing your unused credit cards is actually more likely to hurt your credit score than help it. The reason for this is that the utilization rate of open credit cards is a significant factor in many credit scores. By closing accounts with 0% utilization, you will increase your overall utilization rate, which may hurt your score.