credit report agency compile your personal financial data into reports, which are used by lenders to determine whether you’re a good candidate for loans or credit cards. While Experian, Equifax and TransUnion are the three big consumer reporting agencies, more than 400 others exist.
CRAs collect and package the information they receive from data furnishers—lenders, creditors, utilities, debt collection agencies, etc.—and then sell it to users of the reports, which may include banks, employers and insurance companies. Credit reporting agencies set industry standards for reporting and scoring methodologies and receive a fee from each user of their reports.
The credit scores that lenders use are based on data from the credit bureaus, but they can also incorporate data from other sources. Those other sources are called alternative data. It includes things like rental history, utility payments and cell phone bill payment histories. There are a handful of non-traditional CRAs, such as PRBC (Payment Reporting Builds Credit), and the National Consumer Telecom and Utilities Exchange, which provides reports to lenders that the big three credit bureaus don’t collect.
Credit reporting agencies also get their data from consumers themselves, who provide information about their financial relationships and other occurrences. Consumers can access their reports from the CRAs and have the right to dispute any inaccurate information in them. Disputes are investigated and, if verified, corrected.
Why Can My Scores Differ by Bureau?
Generally, your credit scores can differ by the three major credit reporting agencies. The differences between scores can be attributed to the different sets of data that each agency uses to create your reports. Creditors and other data furnishers aren’t required to share all of the information they have on you with all the CRAs, so there can be variations in what makes up your credit report across the different CRAs.
A lender can use your credit report to make a decision on whether or not to loan you money, the terms of that loan and the interest rate you’ll pay. It can also determine whether to hire you or not, to offer you an insurance policy or a job and how much your rent or mortgage should be. Businesses that give you utilities, cable TV and other services might also check your credit report to see if they can offer you the best rates.
When errors appear on your report, it can be a frustrating process trying to get those mistakes fixed. The team at The Law Offices of Jibrael S. Hindi is committed to helping people navigate the credit reporting process and defend their rights when errors occur on their reports. For more information, contact us. Getting in touch with a legal counselor is just a click or a phone call away.