Do you know what the credit bureaus are for? A credit bureau, also known as a Credit Reporting Agency or Consumer Reporting Agency, is mainly a central warehouse of credit and collection records, payment history, and certain legal data about consumers and businesses.
The credit bureau's purpose is to sell (note the word sell) your credit history to lenders, banks, landlords, and even employers so they can make a decision if they want to entrust you with their capital. We all know the most recognized United States credit bureaus Equifax, Experian, and TransUnion, but their are two others you should know. The up-and-coming new bureau is Innovis and we should not forget its importance to our scores. Dun and Bradstreet Corporation is also extremely important because it deals exclusively with business credit records.
Do you think you or your business would ever make a mistake if you had to track over one billion records and two billion individual transactions each month? Of course you would simply because no one is that perfect.
Most credit report errors go unnoticed, but most people don't know that just about 80% of credit reports contain errors so they don't think to question it. Think about it, does McDonald's get every order correct?
The U.S. Government has recently set out obligations for the bureaus to maintain accurate records along with requires them to provide a way for consumers to view their records. It also laid out improvements for responding to consumer complaints.
Credit reporting bureaus are still businesses that need to make profits like any other. Their profits are derived by charging banks, lenders, credit card companies or utility companies for accessing customer's credit files. This also means that researching your credit disputes costs them resources, time, and money to investigate.
Let's look at the first major secret behind the credit bureaus:
Depending on who requests your credit information, your score could have up to 92 individual variations. This means each of the bureaus could have potentially 23 independent scores outside of your actual real score.
The score you receive will differ depending on whether a major reporting bureau requested it or whether an online company requested it. It also depends on which profile has been given to you during the request.
For example, when you apply for your report through an online agency you'll be required to match up around 18 points of identification to verify who you are. Unfortunately when a mortgage broker requests your score, they only submit around 9 elements of identification to match which allows room for more errors and therefore may reduce your score.
There is some speculation that credit reporting bureaus may actually give lower scores for some customers to lenders' inquiries than they would for online services as they face a potential risk of being sued by a lender should that customer default on a loan repayment.
Wow. So are they protecting you? Or just protecting themselves?
