Credit Reporting Bureaus

Credit reporting bureaus gather information about consumers' financial information to determine how creditworthy they are. They then sell this information to lenders.There are three national credit bureaus and a number of smaller credit bureaus throughout the country. Most of the smaller ones are affiliated with one of the three larger bureaus.

National Bureaus

There are three national credit bureaus: TransUnion, Equifax and Experian. Equifax is the oldest and was founded in 1899. TransUnion was founded in 1968, and Experian in 1980.

Information Sources

The bureaus get their information from banks, credit card companies, utilities companies and collections agencies. Each time your payment is due, the creditor reports whether you paid it and other basic information about the account. Credit bureaus also have access to public records, so they report items such as judgments, bankruptcies and collections.

Credit Scores

Credit bureaus compile consumer financial information and use it to calculate a credit score that represents how creditworthy you are. Credit scores use payment history, amounts owed, length of credit, applications for new credit and the different types of credit to determine a consumer's credit risk. The three national credit bureaus use the same factors but slightly different formulas, so your score may differ between credit bureaus.

Services

Credit bureaus must provide a free credit report to each consumer once per year upon request. Credit scores cost extra, but consumers or lenders can purchase a credit score report. Credit bureaus also provide services to help prevent fraud, to verify checks and collections, and to help businesses manage risk.

Errors

Credit bureaus make mistakes. Once alerted to an error on a credit report, they must investigate it within a month.