Experian vs. Equifax vs. TransUnion: Who’s Who in Credit Monitoring

If you’ve ever applied for a loan or a line of credit, then you are likely to be familiar with credit monitoring services. You must be aware of the importance of your credit report and credit score, as well as the three major credit bureaus. In general, credit bureaus are responsible for gathering the credit information of consumers and using it to assess their overall financial responsibility.

But how do credit bureaus collect your information, what do they do with it, and what’s the difference between the three major credit bureaus? In this article, we’ll discuss what credit bureaus are, how they collect data, and what the significant differences are between each of them.

What Is a Credit Bureau?

A credit bureau is an organization that collects and sells data concerning the credit history of individuals. They generally collect data like your credit card and loan balances, the number of credit cards you have, your payment history, any insolvency, as well as any other information pertaining to your credit.

Nowadays, there are three major credit bureaus responsible for collecting credit information: Equifax, Experian, and TransUnion.

Credit bureaus began as a way to assist lenders quickly gauge the reliability of a potential borrower. In the past, businesses relied on the “honor rule” when determining if an individual was responsible enough to pay back a loan. With the explosion of the Internet, however, credit agencies became much more necessary to ensure the prevention of fraud.

Today, credit bureaus have streamlined and computerized the process by compiling all of the data they collect and translating it to a credit report and credit score. While each credit bureau calculates credit scores differently, and every lender has different credit score requirements, credit reports and credit scores allow for a universal measuring stick to judge prospective borrowers by.

As of late, credit bureaus have also branched out to providing dozens of additional products to help individuals and businesses to monitor their credit, including identity protection, credit monitoring, and much more.

How Do Credit Bureaus Collect and Use My Information?

Credit bureaus mostly collect information from credit institutions where you currently have a connection, such as banks, credit card companies, and other loan suppliers. While credit bureaus don’t have access to these accounts, credit institutions share their credit information with the credit bureaus.

Collection bureaus and debt collectors can also report to the credit bureaus if you have any delinquent accounts. 

Now that you know how credit bureaus collect your data, you’re probably wondering how they use your information.

Credit bureaus use your information to make credit reports and credit scores. They then use your information in collaboration with potential lenders, landlords, and other companies for several reasons. Your credit report could be used in the following scenarios:

  • When a creditor is checking your credit to determine if you qualify for a loan.
  • If a landlord is determining whether to accept your rental application.
  • When a new employer runs a background check.
  • If you are about to begin service with a utility supplier.

Credit bureaus also sell information for advertising purposes. For instance, if a creditor is looking for potential customers with poor credit that may need a credit card, the lender will contact a credit bureau to obtain a list of qualifying candidates. This is often why many consumers receive preapproved credit card notifications in the mail.

While the collection of data may sound suspicious to some consumers, the good news is that you are protected by the Fair Credit Reporting Act (FCRA). The FCRA is a law that says consumers have the right to know what’s on their credit report as well as the right to dispute any mistakes that are reported. 

Additionally, it also lays out what is defined as a “permissible purpose ” and “impermissible purpose” for a creditor to retrieve your data, while also stating that they must have your consent to do so.

What’s the Difference Between Each Credit Bureau?

Now that you understand the basics of credit reporting, let’s take a look at what the differences are between each of the three major credit bureaus.

Equifax

Alt Text: Equifax

Equifax is a credit bureau that lists accounts from groupings of either “open” or “closed,” making it easy to view credit information. 

Additionally, Equifax breaks down credit reports into several sections:

  • Revolving accounts (i.e., credit cards and charge cards from department stores)
  • Mortgages
  • Installment loans (i.e., auto and personal loans)
  • Consumer statements
  • Private information (i.e., history of known addresses)
  • Inquiries from prospective creditors
  • Public records (i.e., bankruptcy)
  • Collections (i.e., accounts that have been delivered to debt collection agencies)

Experian 

Similar to Equifax, Experian provides monthly data for every credit account, including the minimum payment due, payment amounts, and balances. To get a full scope of a borrower’s credit history, businesses often use a combination of Equifax and Experian to determine eligibility. 

Experian breaks down credit reports into several sections: 

  • Personal information (i.e., previous home addresses)
  • Employment history
  • Credit accounts (i.e., credit cards, mortgages, loans)
  • Credit inquiries

TransUnion 

Similar to Experian, TransUnion is also a credit information aggregator that collects the information of more than one billion consumers worldwide. TransUnion uses multiple techniques for collecting data, such as banks, lenders, and other companies that send periodic updates regarding your credit accounts. They can also acquire this information from public records.

TransUnion breaks down credit reports into several sections:

  • Payment background
  • Accessible credit
  • Credit use
  • Outstanding debt selections
  • Public records (i.e., bankruptcy, foreclosure, tax exemptions, repossession)

Monitor Your Credit with SmartCredit Today

Your credit is one of the most powerful tools you have as a consumer. Whether you use it to secure a low-interest loan or apply for a mortgage, your credit is responsible for opening several doors of opportunity in your life. Monitoring your credit is one of the best ways you can ensure that you are always in solid financial standing.

With SmartCredit, you can now take a simple yet innovative approach to credit monitoring. Whether you’re recovering from identity fraud or trying to build up your credit, SmartCredit can provide you with all the tools you need in one easy-to-find location.

From routinely checking your credit report to handling disputes or claims, SmartCredit puts your financial freedom at your fingertips. 

Apply with SmartCredit today to start monitoring and improving your credit instantly.

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