Most people who have entered into the world of credit have heard of Experian, Equifax, and TransUnion. These three credit reporting agencies—also called credit bureaus and consumer reporting agencies—play a big role in our ability to get mortgages, car loans, credit cards, and sometimes even renting an apartment or getting a job. The two main scoring models to calculate your credit score are FICO and VantageScore and lenders may look at one, or both of them when making decisions to issue credit or approve you for loans.
What you need to know now about NCRAs:
What and who are the NCRAs?
TransUnion, Experian, and Equifax are the three major credit reporting agencies. They collect and maintain the information that makes up your credit history and your credit report. NCRAs are for-profit companies that sell this information to other companies, like lenders, insurance companies, potential employers, utility companies, and landlords. They do not share information with each other, so information that is found in one credit report may not be in another.
What type of information do they collect?
NCRAs collect information from your creditors, like a bank or credit card company, and public records, such as property and court records. Each NCRA gets its information from different sources.
How does the information collected by NCRAs impact your credit?
The information collected is used in your credit report. Organizations that may request your credit report include lenders from whom you are seeking credit and those who gave you credit; utility companies from whom you are requesting service; your employer or prospective employer; and banks where you want to set up an account. What is in your credit report can negatively or positively impact your credit score, which is a number that is used to determine your creditworthiness. The higher the score, the better, giving you access to more financial products and better terms. On the other hand, a low or no score can result in your prepaying utilities rather than receiving a bill, being denied a credit card, and not getting that dream job.