All about credit reports and credit bureaus
A credit report is a statement of an individual that contains their detailed credit summary as well as their personal information. This statement provides information of the individual related to their credit activity, along with the current credit status of the person, such as payment of loans, their present account standing, etc.
What does a credit report contain?
- A credit report is divided into four sections.
- Each section is allotted for information related to several aspects of the individual.
- The first section of the credit report of an individual contains their personal information, such as the full name of the individual, along with the variances, the social securities along with the variances, their date of birth, and the present and past addresses of an individual.
- The next section of a credit report contains a majority of the reports that contain information within the lines of credit, or trade lines.
- The third section of a credit report contains public records of tax liens, civil judgments, bankruptcies, etc.
- The last section contains a list of all entities who have inquired to get the individual’s credit report.
- For an average period of 10 years, the credit report of an individual contains their bankruptcy filing returns, while any negative information of an individual, such as delay in payments, charge-offs, settlements, voluntary surrender, etc. appears on the credit report for a period of 7 years.
What is the use of a credit report?
- A credit report of an individual is used by several lenders or other entities such as insurers, landlords, creditors, employers, etc., to determine the individual’s creditworthiness at the time of application of loan, at the time of recruitment, renting of a property, or taking up an insurance policy.
- The lender can understand the person’s payment mode as well as the frequency of payments made by the individual, and based on this report, the terms and conditions are determined by the lenders.
From where can lenders get access to an individual’s credit report?
- Lenders have to pay a certain price to the credit reporting companies, also known as credit reporting agencies or credit reporting bureaus, to get access to the credit report of an individual prepared by them.
- The 3 major credit bureaus of the country are Experian, Equifax, and TransUnion.
- These 3 credit agencies do not operate under the government.
- The amount received by the credit reporting agencies from the various entities or lenders makes their earning.
From where does a credit bureau acquire the required information?
- A credit bureau prepares the credit report of an individual.
- This report is based on the information that the bureau acquires from various sources as well as from their observations on the individual’s bill-payment patterns and habits.
- The credit reporting agencies or credit reporting companies also acquire information related to the financial aspect of the individual whose credit report they are preparing from their creditors, lenders, credit card companies, and other financial companies.
How and how often is an individual entitled to get their credit report?
- Everyone can get their credit report from all the 3 credit bureaus, which are Equifax, TransUnion, and Experian.
- The government of the country has authorized AnnualCreditReport.com to allow individuals to get their credit report online.
- Every individual is entitled to get their credit report once each from the 3 credit bureaus in a span of 12 months for free.
What is Experian PLC?
- Experian is a consumer credit reporting bureau or credit reporting agency based in Dublin, Ireland, with its headquarters in Brazil, the United Kingdom, and the United States of America.
- Its services are spread wide and it’s present across 37 nations.
- Experian aggregates information and data of 35 million consumers and over 25 million businesses in the country.
What is Equifax?
- This consumer credit reporting agency was founded in 1899 and is based in Atlanta, Georgia.
- Equifax collects and aggregates data of individuals as well as businesses across the world.
- Among the 3 credit agencies, Equifax is the largest.
- 57,000 consumer complaints have been filed with the Consumer Financial Protection Bureau against Equifax between October 2012 and September 2017; most of the complaints are based on outdated, misattributed, and incomplete information acquired by Equifax.
What is TransUnion?
- Transunion is a Chicago, Illinois, based credit reporting company that aggregates information of over 1 billion consumers and 65,000 businesses.
- Transunion is the smallest among the three credit bureaus of the country.