12 DAYS OF MASTERING CREDIT DAY 3

DAY 3

THE CREDIT BUREAUS

There are three major consumer reporting agencies or credit bureaus, Equifax, Experian, and TransUnion. These companies collect information from various sources, i.e. past or current employers, and provide consumer credit information on individual consumers for a variety of uses. FICO, the company who developed and maintained the FICO Score is not a credit bureau. While they compile your credit score based on data from the major credit bureaus, they do not collect credit report data on their own.

 Equifax is headquartered in Atlanta, Georgia. Experian is headquartered in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil. TransUnion is headquartered in New York, New York.

These are the organizations that provide information on individuals borrowing and bill paying habits. This assists those who extend credit to consumers to properly gauge the consumer’s credit worthiness; in addition it can help determine the ability to pay back a loan and can affect the interest rate and other terms of a loan concerning mortgages. It is the credit bureaus LEGAL responsibility to maintain accurate records, and it's your right as a consumer to ensure that they do just that, remember this phrase “for the people, by the people”.

These bureaus are all publicly-traded, for-profit companies who are not owned by the government. I inform my customers all the time that the credit bureaus do not have some special power over you. They are like McDonald’s, McDonald’s business is selling hamburgers, the credit bureaus business is selling your credit report. Yes they sell your information. This is the main reason that they do not want to easily remove inaccurate items that appear on your report. Imagine that they have thousands of records from each company, like a nationwide furniture company for instance. The credit bureau sends Macy’s their bill for keeping the record of all the customers. The furniture company does not deem it necessary to go through all the thousands of records to find out which ones are no longer account holders. Then the credit bureaus are not going to take the time to do it themselves. The more accounts the higher the bill which equals more money for the credit bureaus. Also they this means they have more names and addresses to sell to telemarketers and credit card companies.  To keep the credit bureaus from selling your information, you can opt out. You can also opt for a two-year period, renewing your request at any time in the future. Call 1-888-5-OPTOUT or 1-888-567-8688. You can also fill out the form online www.optoutprescreen.com to opt out of all credit offers sent to you in the mail.

When you engage in a credit transaction (loan, mortgage, credit card etc.) with a bank or any other creditor the information for each of these accounts will be reported to one or more of these CRAs (credit bureaus) by each creditor and each month each “credit item” will be reported in your “credit file” which is indexed under your social security number, physical address and full name.

Trimerger

If you are in the market for a new home you may come across the phrase trimerger or a tri-merge credit report. The name is exactly as it says three credit reports in one. This type of report is accessed in the majority of the instances by a mortgage broker, which uses the three credit reports to evaluate a borrower’s credit potential. A credit report is obtained from each of the three credit bureaus (Equifax, Experian, and TransUnion).

Middle score

The lender then takes your scores and uses the middle or median score to calculate things such as rates, interest, etc. For instance if you have a 720 on Equifax, 710 on Experian and a 699 on TransUnion, then the lender will use your Experian score of 710 to make the above-mentioned determinations. However they can access your credit report at a different date and your TransUnion can be a 760, your Equifax can still be a 720 and your Experian a 710. This means that now your middle score is now 720 on Equifax. Your middle score can change at any time, it is not set to a particular bureau but rather is based on what the scores are at the time that they are accessed by the lender.

If you want more information on how to improve your credit score contact us at 1-888-824-7622 or at our website The Credit Genius.