Before you start looking for credit rebuilding companies, it’s important to assess your credit and see what assistance you need. With that in mind, there are 3 main credit bureaus that track your credit score. This is important, because it gives a good insight into your current credit, what score you have right now, and how you can repair and improve your credit.
What do Credit Bureaus do?
Credit Bureaus compile your credit score and credit reports. These are created for lenders and governments. These entities compile all your information to show whether a person is credit-worthy or not. Credit scores can range from 300 to 850, with higher numbers representing better credit status. This can impact the loan amount that you qualify for, the amount of interest you pay, and also employment or renting opportunities.
As you can imagine, the main focus of Credit Bureaus is to ensure that a person is trustworthy when it comes to paying back their debt. If they’re not, and have a history of financial problems, their credit score is generally low. Obviously, lenders and many others that expect money from a person need to know if they have a history of bad payments, so a person’s credit score is a good insight into that.
Who are the Top 3 Credit Bureaus?
In the United States, you can find a multitude of Credit Bureaus. However, 3 of them are known to have major significance all over the country. These are Equifax, TransUnion, and Experian. This trio dominates the market right now. They compile all your credit information and then share it with potential lenders, employers, and the like.
For the most part, each Credit Bureau collects the same basic consumer information. That includes personal data such as job history, date of birth, current and former addresses, and your social security number. It also covers things like payment history, credit application activity, debts, credit history, and so on. They will collect information regarding house rentals, student loans, and personal loans, as well.
Why do Credit Bureau scores vary?
The lender will always perform a credit check whenever you apply for a loan. Some lenders don’t work with all 3 major Credit Bureaus. They might have a relationship with a single credit scoring system. Since not all lenders are reporting credit activity to every Credit Bureau, you will have reports that differ from one to the other. With that being said, most lenders just examine a single report, however, if you want a mortgage, they will cover all 3 bureaus. So if there are any differences, they will just use the average between these 3 as a credit score.
As you can see, Credit Bureaus are very important, because they monitor your credit history and dictate your current credit score and purchasing ability. Lenders use this information to ensure that they know exactly who they are dealing with. If the person in question is known to have a history of financial woes, then lenders are usually not willing to take a financial risk on them.