First About Credit Bureaus

There are three National credit agencies: Experian, Equifax, and TransUnion.  Each is independent of each other.  They gather their information on consumers from credit card companies, banks, lenders, and others.  In turn, these companies obtain information on consumers to make decisions on whether to approve loans, or to even adjust current consumer accounts.

Each of the three credit bureaus gives a score to each consumer.  The most common score is the FICO score (named because it was developed by Fair Issac and Company), it is calculated based on type of accounts that you have opened.  Also taken into consideration is how long accounts have been open, their balance, available credit, length of credit history and payment history.  Closed accounts are taken into consideration by how long they were open and how many there are. Closing an account may NOT lower your score. They will still show on your credit report. Also, having a longer history of managing a credit card can be a good thing. Each credit bureau may have a different name for their score but each is based on the principals of FICO.

Lenders use a score from the credit bureaus but each score may be different based on what data was reported to what agency.  Lenders may include other information about you. Scores change over time, so your score might change month to month as you rebuild your credit.

Consumers are allowed to receive a free copy of their credit report from all credit bureaus once every 12 months. Call all three to request your copy. Pull your credit and correct any errors. One example of a mistake is that people with common names will find other people’s information in their own file. Some studies show that one in four people have a mistake or error on their credit report. By receiving your own copy, you’ll be able to catch or correct these mistakes.