What is a Credit Bureau?
To begin, a credit bureau is a credit agency used in the United States that holds a purpose of collecting and researching someone’s credit information to sell to creditors for a certain fee. They are the ones responsible for making lending decisions for their clients which usually consist of banks and other companies that offer loans. For example, if you are trying to purchase a car or a house, one of the first things that companies in that category will do, is pull your credit score that comes from a credit bureau. Once they successfully pull your credit score, you will be told whether you are eligible for a loan overall, how much of a loan you will get, and most importantly how much interest rate you will have to pay with that loan.
How Many Credit Bureaus Are There?
What many people do know, or at least those recently starting on their credit journey is that there three credit bureaus. The three major credit bureaus include: Equifax, Experian, and Transunion. All of these on their own, calculate credit scores using the FICO system that ranges between 300 to 850. Another system that is used for pulling your credit score is the VantageScore. Like the FICO, this system also ranges credit scores from 300-850. The main difference is that this specify type of credit score is just a combination of all your credit that has been reported to the three credit bureaus listed above, but joint to create one score. Overall, these credit scores are just like school grades, the higher you have your credit the better off you will be when applying for a loan anywhere.
Which credit Bureau has the most accurate scores?
While there is no credit bureau that has more accurate information that another, there are lenders that do have a preference on which credit score to use. Most lenders usually prefer to use the FICO score instead of the VantageScore system because it is gathers industry specific scores that help lenders see if their customers have the ability to pay their loans. The VantageScore does not have this option.
If you are curious to see what your credit score is get in touch with a credit professional HERE