What Is a Credit Bureau & What Data Is Included in Your Credit Report?
About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area, that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual financial planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the The DREAM Financial Planning Process ™ to help our clients achieve their goals.
A credit bureau, also called a credit reporting agency, is a company that collects and stores information about how you manage your credit and finances.1 This data is then used to create your credit reports, which form the foundation of your credit score.
Experian, Equifax and TransUnion are the three major credit bureaus and are often grouped together.2 While they’re not the only bureaus in existence, they are some of the most well-known companies that compete for the business of creditors. Let’s address the data collected by credit bureaus, how they obtain that information to create your scores and reports and how to get in touch with them if something isn’t right.
What Data Is Included in Your Credit Report?
A credit report often consists of your history as a consumer and borrower. In order to develop these reports, credit bureaus collect a few key pieces of information that identify you and offer insight into how you manage your financial obligations. As such, your credit report may include:
- Account information: The types of accounts you have, the dates those accounts were opened, your credit limit, account balances, payment history and more.
- Collections: May include unpaid accounts that have been passed on to a collections agency.
- Inquiries: Records of when you allow someone to access or check your credit reports, such as when you applied for a credit card or loan.
- Personal Information: Your name, address, Social Security number, date of birth, etc.1
Rules Credit Bureaus Must Abide By
While credit bureaus don’t need your permission to collect data, they aren’t allowed to do whatever they please with the information acquired. There are strict guidelines bureaus must follow, which are regulated by the Fair Credit Reporting Act (FCRA).3
- Disputes: As a consumer, you have the right to dispute information on your credit report that you believe to be inaccurate. Your dispute must be investigated by a credit bureau and the item removed from your report if it hasn’t been verified to be accurate.
- Access to your information: Your information can only be shared with someone who has a “permissible purpose” to access it. This may include lenders, collection agencies, landlords, employers and you.
- Expiration date: For the most part, negative information has an expiration date of seven years. But, items such as bankruptcies may remain on your report for up to 10 years.
- Free copy of your report: Credit bureaus must allow access to view a free copy of your report once every 12 months.
Changes in Credit Reports From Bureau to Bureau
Your credit scores can vary depending on the bureau you check with. This can happen because of the possible differences in data that make up each report. For instance, creditors are not required to report information to credit bureaus. While many choose to do so, some may send your information to only a few of the main bureaus.2 This leads to variations in scores and reports across the board.
Bureaus also have a tendency to use independent scoring models that take different approaches when evaluating your credit reports. This can also result in different credit scores, even if the same report from the same bureau is being used.2
Other Credit Bureaus to Take Note Of
Any organization that collects information about consumers and sells it to others is known as a consumer reporting agency. While this largely includes Experian, TransUnion and Equifax, there are other credit bureaus to be aware of. Here are some others you may want to know about:
- ChexSystems: Collects and reports information on closed checking and savings accounts.
- LexisNexis: Provides reports to lenders with information that Experian, TransUnion and Equifax don’t collect.
- C.L.U.E. Inc.: Collects insurance-related information and creates consumer auto and personal property reports.
- CoreLogic: Supplies tenant screening reports to landlords. These reports may include any history of evictions and a background check.
Remain Informed of Your Credit Information
It’s important to check your credit report regularly to ensure there are no errors. Becoming a member of websites such as Credit Karma allows you to access your Equifax and TransUnion credit reports any time for free. You can also request a copy of your credit report for free once per year.
In the event that you discover an error in your credit report, contact the associated credit bureau and file a dispute. They will be required, by law, to investigate and correct a mistake if they’ve made one.3
Dream Financial Planning Process ™
Whether you're managing student loan debt, starting a business, or considering buying your first home, the DREAM Financial Planning Process™ is tailored to the unique needs of busy professionals is their 30s and 40s. This process focuses more on short-term goals while you grow and evolve in your personal and professional life. If you're looking for guidance on: Financial Planning, optimizing employee benefits, budgeting, student loans, and managing your 401k or investments we can help.
With uncertainty surrounding the economic stability of our country, it's okay to have fears and anxieties surrounding your own savings and investments. The most productive course of action from here is to reach out to Dream Financial Planning (or whoever your trusted advisor might be) and discuss your options. It's easy to have knee-jerk reactions when it feels like the bottom is falling out, but it is imperative to make decisions using research-backed data and a level head. If you'd like a Complimentary Review and risk assessment of your investment portfolio feel free to send me an e-mail.
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One article from U.S. News & World Report discusses when it might make sense to work with a Financial Advisor and the additional value we can provide beyond just managing investments. I also included two downloadable PDFs. One highlights what you should consider when paying off your student loans. The other provides guidance on Income-Driven Repayment ("IDR") Plans, which can be an attractive option for federal student loan borrowers.
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