If you’ve ever asked for a loan, whether for a car, a house, or even a small business, you’re well aware of the significance of credit ratings.
Credit reports inform lenders about your credit history and reflect your borrower’s reliability.
Credit reports also assist you in better understanding your credit, improving your credit score, and preventing fraud and identity theft. It is also extremely important that you frequently monitor your credit profile which is what these companies do.
So, how can you obtain a copy of your credit report? Credit bureaus such as Equifax, Experian, and TransUnion play a role in this.
The more common term for credit bureaus is also Consumer Reporting Agencies (CRAs).
In this post, we’ll go over all you need to know about credit bureaus, including the differences between Equifax vs. Experian vs. TransUnion, so you can confidently grasp the significance of your credit report and credit score.
What Is Credit Monitoring And How Does It Work?
A CRA is an organization that collects and sells information about people’s credit histories.
They usually collect information like your credit card and loan balances, the number of credit accounts you have, your payment history, and any bankruptcies, among other things.
There are many of these CRAs today, but let’s compare Equifax vs. Experian vs. TransUnion, also known as the “big three.”
CRAs gather information on potential borrowers and sell it to banks to assist them in making informed loan decisions.
Equifax, the oldest of the “big three,” was the first to capitalize on this demand in 1899.
By integrating the data, they collect into a credit report, and credit score, the CRAs streamline and automate the entire process.
While credit scores are calculated differently by each credit agency, and each lender has various credit score requirements, credit reports and credit scores provide a more uniform yardstick to measure potential borrowers’ credit risk.
CRAs have recently expanded their offerings to include dozens of other services for both consumers and organizations, such as identity theft protection, company marketing, and more.
CRAs primarily collect data from credit organizations with which you already have a relationship, such as banks, credit card companies, auto dealers, and student loan agencies.
CRAs can’t access these accounts; instead, credit institutions share information with them. Credit institutions don’t have to share information with the major credit bureaus and disclose data to one, two, three, or none of them.
These CRAs often keep track of your account balances, available credit, payment history, and the number of open and canceled accounts.
If you have any delinquent behavior, collection agencies and debt collectors can report this status to the CRAs.
The remainder of the data collected by CRAs comes from public court documents. They look through these records to see any tax liens, bankruptcies, foreclosures, or repossessions.
But how do CRAs use your information? Credit bureaus use your information to build credit reports and credit ratings.
For various reasons, they then share your information with potential landlords, lenders, and employers.
Information from credit bureaus frequently gets sold for marketing purposes.
For example, if a lender is seeking people with bad credit who might require a credit card, this is a strategic place to start.
The lender will call a credit bureau, which will sell the lender a pre-screened list of persons who meet their criteria together with their contact information.
However, regulations are in place to protect you and your information, including the Fair Credit Reporting Act (FCRA).
The FCRA states that you have the right to see your credit report and to challenge any mistakes you notice.
It also specifies what constitutes a “permissible purpose” for a lender to pull your credit report, as well as what constitutes an “impermissible purpose.”
Suppose a potential lender, landlord, insurance agency, or anybody else wants to see your entire credit report?
Of course, they must first have a legal reason and your permission to view your details.
If you don’t want credit bureaus to pre-screen your information before sending it to third-party lenders, you can opt-out at OptOutPrescreen.com.
How Can Credit Monitoring Prevent Fraud?
Another advantage of using a credit bureau’s services is to avoid fraud and safeguard your identity.
You can spot anything fraudulent and secure your information if you keep an eye on your credit report.
The earlier you detect a problem with fraud or identity theft, the better. One of the best things about using one of the “big three” credit agencies is that they all provide some fraud monitoring service and additional security.
It is not a good idea to take any chances when it comes to fraud and identity theft.
Instead, it is crucial to act fast if you suspect any scam involving your credit cards, bank accounts, or identity or if your identity is stolen.
You can check on your credit report and report a fraud alert, often known as a security freeze or a credit freeze if you suspect foul play.
A fraud alert and a security freeze are procedures to protect your credit report and personal information, but there are some differences:
- Fraud alert – A fraud warning alerts credit bureaus to the possibility of fraudulent conduct, requiring lenders to take extra care to verify your identity before providing you with credit.
- Security freeze – A security freeze prevents lenders from seeing your credit record until you lift the freeze, usually done using a PIN.
Fraud warnings typically last 90 days unless you’ve been a victim of identity theft, in which case the alert might belonger.
You can contact Equifax, Experian, or TransUnion and follow their instructions to place a fraud alert.
To action a fraud warning, you need to call one of the “big three” credit bureaus, and they will update the other two.
The main advantage of using a credit freeze is that it is far more secure than a fraud alert.
You will, however, have to unfreeze your credit report each time you or a lender needs to see it, and the CRA may charge you for the privilege.
Therefore, it is usually better to place a security freeze with each of the three bureaus, unlike a fraud alert, to safeguard yourself.
How Often Should You Monitor Your Credit Score
You can check your credit score as many times as you like because it is a screenshot of your credit health at a specific point in time.
Educational credit scores are also available from a variety of financial institutions as well as credit education websites and applications.
Your score is usually free and found on your statement or the institution’s app. However, this score isn’t always the same as the lender views, but it can provide you with a good idea of your credit status.
Top 3 Major Credit Monitoring Companies
Now that you know about credit bureaus and why you should use one, how do you know which one to use?
How do the “big three” stack up against each other? What services does each credit bureau provide?
Here’s a quick comparison of Equifax vs. Experian vs. TransUnion.
Individuals who want to check their Equifax credit report and score and use a free credit lock service should use this site.
Equifax is the oldest of the three bureaus, founded in 1899. Although Equifax has grown tremendously, its slogan of “always focusing on its clients” remains the same.
Equifax now provides a basic credit report and credit score services, as well as several business-related services.
Equifax’s most prominent feature is its free credit lock service, which allows people to protect their personal information at no cost.
Equifax provides a free credit lock service as well as basic credit report and credit score benefits.
- Credit Report: You can get your free Equifax credit report at annualcreditreport.com, just like every other credit bureau.
- Equifax Credit Score: You can get 30-day access to your Equifax credit score by purchasing it.
- Lock and Alert: This free service gives people control over their credit reports by allowing them to lock and unlock them as needed. They also have a mobile app that sends you notifications when your account is unlocked or locked.
Individuals who want to check their Experian credit report or actively monitor their credit report and credit score from all three credit agencies would benefit the most from this service.
Experian was founded in 1968 as part of TRW Information Systems and Services INC. and has had a long history of acquisitions and progress since then.
Experian offers the most personalized credit monitoring and protection programs of the three agencies.
What sets Experian apart is that you can track your credit report from each of the three credit agencies.
This convenient feature allows you to keep track of all your credit information in one place.
Experian also has a FICO score simulator, which helps estimate your FICO score after adjusting to your credit information.
Experian provides credit monitoring and identity theft prevention, as well as loan and credit card matching services.
- Credit Report – You can get your free Experian credit report at annualcreditreport.com, just like every other credit bureau.
- Experian Credit Report and Score – Your Experian credit report and FICO credit score are available for purchase. This purchase is only valid for one viewing session.
- 3 Bureau Credit Report and FICO Score – You can get a copy of your credit report from Experian, Equifax, and TransUnion, as well as your FICO credit score. This purchase is only valid for one viewing session.
- Experian Credit Works Basic – You can view your Experian credit report for free each month.
- Experian Credit Works Premium – You can get a copy of your FICO score and use Experian’s credit monitoring, identity theft protection, and credit freeze services for a fee. This service provides credit reports from all three credit bureaus. This program also allows you to examine your credit reports and score daily, as well as access a FICO score simulator.
- Experian Identity Works Plus – Dark web surveillance, identity theft insurance support, credit lock, and identity theft monitoring and warnings are all available through Experian identity protection. This service also includes Experian credit monitoring and FICO score alerts. You can even protect your child’s identity by using this service.
- Experian Identity Works Premium – Dark web surveillance, identity theft insurance support, credit freeze, and identity theft monitoring and warnings are all included in Experian’s premium identity protection package. Credit monitoring for all three credit bureaus is also available, as are FICO score alerts. You can also protect your child’s identity when you purchase this package.
Individuals who want to monitor their TransUnion credit report and score and manage their business and credit should use it.
TransUnion began in 1968 as a holding company for the Union Tank Car Company, a railroad leasing company.
TransUnion is the smallest credit agency out of the three today, but it is the most powerful regarding its business services.
TransUnion also has a credit score simulator, which is a valuable tool for increasing your credit score because it allows you to examine how changes to your credit will affect your score.
TransUnion provides basic credit reports and scores and free credit monitoring and identity theft protection services.
- Credit report- You can get your free TransUnion credit report at annualcreditreport.com, just like every other credit bureau.
- True Identity- This is a free credit monitoring and identity theft protection service from TransUnion. Unlimited TransUnion credit reports, a credit lock service, and notifications are all included in this purchase.
- Credit monitoring- You can get a complete TransUnion credit report and score viewing, as well as credit lock, credit change alerts, and a score trending and simulator tool for a fee.
Equifax Vs.Experian Vs.TransUnion Who Should You Pick?
Now that you know more about each of the three credit agencies, the question becomes: Equifax vs. Experian vs. TransUnion, which bureau should you use?
The answer is yes to all three!
Because each credit agency gathers different information about your credit history, checking your credit report with Equifax, Experian, and TransUnion is critical.
Fortunately, each bureau is required by law to provide you with a free annual credit report.
One suggestion is to spread out your free credit reports over the year. For example, examine your Equifax report first, then your Experian report four months later, and finally your TransUnion report four months afterward.
In this manner, you can always get a general sense of your credit report without spending any money.
Experian Credit Works, which monitors all three credit agencies as well as your FICO score, is another choice.
Experian is worth your money regarding personal credit monitoring and identity protection if you want more control over your credit report and credit score.
TransUnion, on the other hand, has the most business-related products.
Can Any Of These Help You Repair Your Credit Score?
If you want to keep track of and increase your credit score, you must first understand its meaning.
Essentially, Equifax vs. Experian vs. TransUnion all allow you to buy your credit score.
They also provide credit monitoring subscriptions that will enable you to examine your credit score regularly and send alerts when your credit score changes.
If you don’t want to pay for a credit monitoring service monthly, you can explore other options
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Paul Martinez is the founder of BendingDestiny.com. He is an expert in the areas of finance, real estate, and eCommerce.
Join him on BendingDestiny.com to learn how to improve your financial life and excel in these areas. Before starting this blog, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.