The Three Credit Bureaus… What’s the Difference?

When we talk about credit our pulling our credit score it makes most of us a little uncomfortable. We often don’t know what we will find, or what new surprise is there to greet us. It wasn’t long ago that consumers didn’t even have access to their credit reports, only lenders did when they were determining your credit worthiness.

Thankfully that changed. The credit reporting industries inception was in 1899 and it remained virtually unregulated until Congressed passed the initial Fair Credit Reporting Act in 1970. Since that time, there have been many amendments, including consumer rights and protections, which were passed in 2003.

“What is a Credit Bureau? The credit bureaus are agencies that hold billions of credit histories on consumers and commercial entities. The credit reporting agencies provide the data lenders use to determine an individual or entities credit worthiness.

The Three Big Credit Bureaus are Equifax, TransUnion and Experian. There were at one time over 1,000 credit bureaus locally and regionally in the United States, however the big three bureaus over time, bought or contracted with all the smaller agencies until we were left with just three.

Do you know you have a different credit score from each agency?
Yes, that’s right, your credit score is not the same with each credit bureau. Each agency uses its own mathematical formula to calculate your credit score. Your score can vary by up to 40 points between the three.
Experian uses “The Plus Score” as it’s scoring method. Equifax uses the “Credit Score” and the TransUnion method is the “TransRisk”. The higher your score the lower your credit risk. All these methods are similar to the Fair Isaac Corporation (FICO) score whose range is from 300-850.

Understanding your credit will help to remove some of the anxiety we all feel when we think of our credit score and the impact it can have on your life. Step 1 Credit has a team of credit experts that can help you to gain a better understanding of your credit report and that can help you improve and maintain your credit standing.