It is quite important when lenders assess your creditworthiness when applying for loans or credit cards. On average the three largest consumer reporting agencies are Equifax, Experian, and TransUnion, therefore one report may prove insufficient. Below are important considerations for monitoring all three of your credit reports.
Why Three Credit Reports?
There are three main consumer credit reporting companies in the United States: Equifax Experian TransUnion
These agencies currently hold credit records of over 200 million consumers in America. They get details about your credit and payment history from banks, credit unions, retail companies, and any credit company that gives credit. Information in your credit reports is used in determining whether you qualify for credit cards, auto loans, mortgages, and most other credit applications.
The three agencies do not always have the same information on your credit and credit history. A lender can submit an account to only one or two agencies, thus one report may reveal accounts/ or an account status different from the others. It is also possible that one type of error is present in a report while it is not in the other. This is why, for instance, everyone should review all of his or her three credit reports at least once a year.
That’s how Reports differ by credit agency.
There is no central list that an agency possesses to identify the things that are included in the credit history. Agencies do not receive payment data directly from borrowers, instead, the lenders decide which agency to send the information to even though most large-scale lenders submit the data to all three agencies. As a result, one report may: As a result, one report may:
Organizations whose accounts are not captured in any of the other reports. It is also possible to demonstrate different limits, balances, or account statuses on the same accounts. Also, provide information that might be different from other reports or at least slightly different.
For instance, details such as an address history or employer information might not be uniform across agencies. It may be one character, for example, the middle initial, that may make lenders doubt whether the reports belong to the same person. Such mistakes could potentially lead to your credit files being harmed, thus affecting your chances of being approved for credit.
Having reviewed multiple reports you are in a better position to determine that all accounts are being reported by lenders in all the files. This enables you to ask for corrections and updates to ensure accuracy in presenting information that may be used by the lenders you have in your credit history.
All these reasons explain why you need all three credit reports.
Here are some key reasons monitoring your reports from all three bureaus is essential: Here are some key reasons monitoring your reports from all three bureaus is essential:
The point to note is that mistakes if not checked can be damaging – according to the Federal Trade Commission study, one in four credit reports has errors that could be damaging. Errors do have a way of pulling down one’s credit scores even when they are undeserving of it. It is easier to review all reports and come across mistakes in the process as they are all laid down systematically. Reports Differ – Sometimes, lenders do not report accounts to all the bureins and thus, you may notice some activities missing if you are checking only one file. Some details are captured in one report but missing in the other, and this confuses lenders. Lenders Use Different Reports – There are situations when the lender can take your report from any bureau when you apply for credit. If you have only checked one file, there may be problems in the reports lenders consider. The Consumer Financial Protection Bureau report says that out of one hundred credit card applicants, seven are turned down due to information contained in only one of the credit bureaus. You Can Access Free Reports – Federal law allows you to receive one credit report from each bureau every month, and it must be free. Having the warrant of a full credit report allows you to track all three for additions for changes.
How do Bureaus determine Your Credit Scores?
The three major credit bureaus also offer credit scores that creditors employ to evaluate the credit risk of applicants. The agencies still employ the same basic approach of using credit scores based on models from FICO or VantageScore but produce different scores.
Factors that contribute to different credit scores by bureau include:
- Source Data Inequity – The two agencies only share incomplete account details and therefore your scores explain your past in light of the data sets they hold.
- Model Versions – The burets may employ any of the FICO or Vantage scoring models, including the latest ones or older ones at that period.
- Model Versions – With a single model version from one provider, for example, there can be slight differences in algorithms that may cause some factors to be given a higher importance or priority.
- Scoring Ranges – Base FICO® scores vary between and and base VantageScores between and The bureaus make adjustments based on what is referred to as model adjustments to arrive at the above-mentioned ranges.
A borrower might erroneously obtain only one credit score and focus on it without realizing that the credit score paints an incomplete picture of the level of risk that comes with lending to the borrower across the various models. Thus, they found that monitoring credit scores and full credit reports allows for tracking of improvement across all three scores.
It also enables you to be sure that any change in status is either positive or negative to the activity recorded in your credit history. Coordinating your Equifax Experian and TransUnion credit reports provides detailed credit report pictures as seen by lenders when considering your creditworthiness.
Learn how to get all of your credit reports from each bureau.
According to federal law, you are entitled to get a free credit report from Equifax, Experian, or TransUnion once a year by visiting AnnualCreditReport. com. You can opt for all three of them at once or you can request them separately and schedule your requests for checking one every 4 months continuously.
Third-party credit monitoring services also offer internet-based access to your reports and scores with all of the bureaus. While there is usually a monthly or annual recurring fee to access monitoring platforms, updated reports and alerts are provided to enable one to identify changes. Some services provide free trials for services where one can get access to some of the credit data including VantageScores or one report from one of the bureaus.
Regardless of whether one uses the do-it-yourself approach of getting free annual reports or using the service of a credit monitoring plan, the ability to access all three credit reports provides better insight into payment history as seen by lenders. It allows you to have objections to wrong unverified or outdated information that is kept in your file by individual agencies to avoid credit hitches.
Any strategy regarding the credit should be initiated after having frequent looks at the Equifax, Experian, and TransUnion credit reports. You will be able to approach lenders confidently when you have the assurance that all three fully represent your good-standing accounts for the next few years.
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