What is a credit reporting agency?
Credit reporting agencies (also known as credit bureaus or consumer reporting agencies) that collect information relevant to your credit and financial history. There are three credit agencies: TransUnion, Equifax, and Experian. When you apply for a loan, request an increase on your credit limit or even apply for a new job, your credit report will likely come into play. The three credit agencies collect and house the information that helps potential lenders or employers rate your reliability.
Credit reporting has existed for over a century, and in the early days most communities had a local credit agency. When lenders needed a credit report, they contacted the closest credit agency. Over time, as credit reporting became automated, the local credit agencies were consolidated into the three major regional companies. TransUnion serviced the Central U.S., Experian the West, and Equifax managed the South and East. Today, each of the credit agencies has a national presence.
Each of the credit agencies offers slightly different services. For example, TransUnion is the only credit agency that offers Identity Lock, a service that helps you protect yourself against identity theft. Also, not all venders report to all three credit agencies. This means that the information on your credit report can vary from agency to agency, resulting in different scores.
VantageScore is a system for calculating credit scores that uses letter grades instead of numbers. This makes it easier for consumers to understand their scores. In an effort to more adequately represent the modern economy, VantgeScore made significant changes to how information is gathered and weighted. For example, your payment history is now measured in terms of the last two years. It used be only the last six months. This is a big change, especially if you haven’t been financially active in the recent past. Financial lulls due to retirement or temporary unemployment won’t hurt you the way they did in the old days.
What You Need to Know:
There are various types of credit scores, and lenders use a variety of different types of credit scores to make lending decisions. The credit score you receive is based on the VantageScore 3.0 model and may not be the credit score model used by your lender.
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