How Credit Reporting Agencies Work

The Big Three

A typical credit report you might receive
A typical credit report you might receive

Experian, TransUnion and Equifax -- also known as the "Big Three" -- are not the only credit reporting agencies in the United States; they're just the biggest. According to the Consumer Data Industry Association, an international trade organization that represents credit reporting agencies, there are dozens of smaller, regional and industry-specific credit bureaus that provide clients with credit reports and other "risk-management" services [source: CDI Online]. There are also many international credit reporting agencies that focus on one country or region.

The Big Three get all the attention because they maintain the largest national databases of consumer credit information. Experian, for example, boasts that it maintains credit information on 215 million American consumers [source: Experian]. That's over two-thirds of the total U.S. population [source: U.S. Census].

The Big Three perform two basic services: collecting and reporting credit information. Here's how The Big Three collect credit information:

  • Every month, lending institutions and other creditors send updated consumer credit information to one or more of the Big Three credit reporting agencies. This information includes how much individual consumers owe and whether they make their payments on time.
  • Whenever you fill out an application for a credit card or a loan, all of that information (like income figures) is also sent to the credit reporting agencies.
  • The Big Three also scour public records for financial information, such as court records from bankruptcies and foreclosures.

[source: PBS]

The same lending institutions that supply information to credit reporting agencies also request reports when a consumer applies for credit. Individual consumers can request copies of their credit reports and credit scores, as well. Here's how credit reporting agencies share information with consumers and creditors:

  • Credit reporting agencies only share credit reports and scores when there's a request, formerly called an inquiry.
  • There are two kinds of inquiries: hard and soft.
  • Hard inquiries are requests made by institutional creditors like credit card companies and mortgage lenders and by rental applications to a landlord [source:]. Soft inquiries are made by the consumer himself or by an employer.
  • Negative events like bankruptcies and foreclosures stay on a credit report between 7 and 10 years, while positive events, like on-time mortgage payments, can stay on even longer


It's important to remember that the Big Three credit reporting agencies are independent companies that each collect information in different ways. Therefore, a credit report from Experian will contain slightly different information than a credit report from TransUnion, which will differ slightly from Equifax. Not every creditor and lending institution reports to all three credit bureaus, leading to further discrepancies.

For more information on how credit reporting agencies compile credit reports and calculate credit scores, see How Credit Reports Work and How Credit Scores Work.

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