What Are the Three Main Companies That Will Tell You Your Credit Rating?

Credit-reporting companies collect consumer financial information. They use the information to assess creditworthiness. This valuable information is sold to banks or other lenders. Three main credit-reporting companies exist in the United States: Equifax, Experian and TransUnion. TransUnion, founded in 1968, and Experian, founded in 1980, join Equifax, founded in 1899. Equifax changed its name from Retail Credit in 1975.

Financial Information About Consumers

Credit-reporting companies receive information from utility, credit card and retail accounts. They also receive information from banks and automobile lenders. Each lender to whom money is owed reports payments. Information collected from public databases, such as liens, bankruptcy, judgments or collections on accounts, is also made available by the credit-reporting company.

The credit-reporting companies gather financial and payment information about consumers to create a credit score. This score reflects creditworthiness, or the likelihood of the consumer to repay borrowed money. Payment history, length of the credit account, outstanding credit or owed amounts, credit types and recent credit applications help lenders assess risk.

Three Credit Scores

All credit-reporting companies compile the same kinds of credit and payment information. Each company maintains a proprietary method for determining consumers' credit scores. For this reason, a consumer's credit score may be different at each credit-reporting company.

Credit Risk Management

Consumers may request and receive an annual free credit report from each of the three credit-reporting companies. Lenders or consumers must purchase a credit score recap. Because the three national credit companies want to prevent identity theft and fraud, consumers may receive calls from collections companies even when they do not owe money. The collections agency, lender and credit-reporting company work together to verify accounts. This proactive approach helps lenders identify fraud earlier than they could before.

Review Credit Reports for Errors

Consumers should review their credit reports for errors. The credit-reporting companies sometimes make mistakes. The companies may report multiple errors on a consumer file. Because the credit companies must research errors reported to them within a month, notify each one of mistakes as soon as possible. Follow up with the company to make sure these errors are promptly removed.