Guide to the Three Credit Bureaus
In today's world, credit bureaus, also known as credit reporting organizations, play a vital role in data collection. The three main credit bureaus are usually grouped together, but they are separate and independent entities that compete for the business of creditors, who can use credit reports and ratings provided by these bureaus to help them in making lending decisions.
One of the main purposes of these bureaus is to assist lenders in making objective and accurate judgments about potential clients. For that purpose, these for-profit organizations gather people's credit and debt activities and then provide data that financial institutions and other businesses can use. Lending businesses can obtain important insight into a person's financial background and ongoing account management habits since credit reports reflect when data is updated.
In this article, we’re going to look at the three major credit bureaus, what kinds of information they collect, and how you’re allowed to use this information as a lender.
What Are the Three Major Credit Bureaus?
The credit bureaus—Equifax, Experian, and TransUnion—are the central databases of all your credit information. These companies track where people live, what they buy, whether they pay their bills, and even how much money they make. Each of the three main credit bureaus keeps a record of different pieces of information about individual consumers.
Equifax
Founded in 1899, Equifax is now one of the three leading credit reporting agencies in the world. This company does more than just collect and analyze consumer credit data; they also offer credit and identity monitoring services, as well as resources for those who want to do things like fix their credit, build credit, or freeze their credit.
Experian
As one of the most comprehensive credit reporting companies, Experian has clients in more than a hundred different nations. Providing credit monitoring, free credit scores, and other consumer information, the organization actively keeps credit data for about 220 million US customers and 40 million US businesses.
TransUnion
TransUnion is likewise a worldwide player, with a reputed ability to monitor the credit data of hundreds of millions of people in 30 different countries. In the same vein as the other major credit bureaus, TransUnion offers services such as identity and credit monitoring, free credit tools and resources, and education on consumer rights.
What Information Do the Three Major Credit Bureaus Collect?
The three major credit bureaus collect data from each of their customers, which is then distributed among lenders and other financial institutions. They maintain files on millions of consumers, who can also get copies of their credit reports for free once a year at annualcreditreport.com.
The credit bureaus have information about people's income, debts, previous addresses, etc., which includes all their past financial transactions. This information is used by banks and lenders to determine their eligibility for loans. As a lender, the three major credit bureaus should be able to provide you with accurate information about your client’s finances.
How Are You (The Lender) Allowed To Use Your Customers’ Credit Information?
In the U.S., there are two main laws that govern how lenders can use their customers’ credit information: the Fair Credit Reporting Act (FCRA) and the Consumer Protection Act (CPA).
The FCRA applies to anyone who works with credit reports, including lenders. The CPA applies to anyone who works with consumers, including lenders.
As a lender, you have access to detailed information about your customers. And you're allowed to use that information to make decisions about your customers' creditworthiness.
When you pull your customers' credit reports, you'll see many different factors besides their credit scores. For example, you may see their name, address, social security number, phone number, and other information there.
You can also find out whether they're in bankruptcy or have any past-due accounts. You'll also see details about their payment history and other similar information. All of these details are public record. So if you, the lender, would like to use the information in any way, you need to obtain it from the credit bureaus.
When you're considering whether or not to lend money to someone, the last thing you want is to end up stuck with bad debt. And while there's no way to completely prevent bad debt from happening, using credit information can help you spot signs of trouble before they get out of hand. By carefully analyzing your customers' financial history, you'll be able to see patterns and determine whether your customer is likely to default on payments in the future.
It is important for lenders to be able to take a holistic view of their customers' financial situations when deciding on whether or not they'll be able to make the payments required by a loan. One of the strongest signals that someone is likely to default on a loan is if they have been negligent in making payments on any previous loans with any of the same lenders.
As a lender, you are allowed to use your customers' credit information to make an informed lending decision. You are also allowed to use their credit history as part of the analysis when deciding on what kind of loan terms you should offer them, and also use their credit information in combination with other metrics like job history, income level, and even criminal records.
Crediting Reporting Services for Your Business
We understand that lending money can be stressful and time-consuming, particularly if you lack the right tools. This is why at Soft Pull Solutions, we have made it our mission to mitigate your risk as a mortgage broker or lender.
API is advantageous for credit reporting services, and our credit reporting software can assist you in making more informed and secure business decisions.
Soft Pull Solutions credit reporting software provides a safe, simple, and efficient method of accessing your clients' credit information. Client data is derived from the three credit bureaus to create a comprehensive credit report file (Experian, Equifax, and Transunion). A custom API will also allow you to make bulk requests, which are more common in high-volume, fast-paced businesses.
If you want to run automated income checks and credit reports at any time and from any location, Soft Pull Solutions' review dashboard provides a full range of verification services to make financing not only easier, but also safer for lenders. We can give a thorough picture of your customer's credit history since we can share both good and negative client information. Soft Pull Solutions’ credit reports may also include alternative credit information.
Our full-file reporting service includes the following features:
- Bankruptcies, liens, and judgments
- Employment and income data
- Consumer stability data
- Contact information
- Payment history
- Accounts types
Our services will help you resolve mortgage-related issues that have kept you from closing some of the most difficult loans, and our major objective is to accelerate loan approvals so you may grow your business as efficiently as possible. We can also assist you if you need a private agency to help you integrate an API for your lending business or if you have any inquiries about credit reporting software.
Make an appointment or call us today to see how we can help your loan business grow faster.