Why do the Three Credit Reporting Agencies Have Different Information?
Three Credit Reporting Agencies...
Recently, while counseling a couple attempting to qualify for financing to buy a new home,
the wife asked me why the credit reporting agencies or bureaus - Trans Union, Equifax, and Experian - each had
different credit information reflected in their credit reports.
She was reading her credit reports from all three credit bureaus and sure enough,
they each had different information. Itâ€™s a very common question. The answer is because credit
bureaus are not Government entities, but "for profit" companies. They gather consumer credit
information from creditors, lenders and data retailers based upon their own respective company policies.
Many consumers believe the credit bureaus share consumer credit information.
However that's just not true. They are in competition with each other for their share of the $4 Billion to $6 Billion credit reporting industry market.
With that said, many of the larger banks and credit card companies,
like Capital One Bank or Bank of America, use the eOSCAR system to report your credit information
to all three credit agencies. So usually, you will see the same account information reported
on the credit reports for all three agencies.
However, there are many lenders and creditors that choose to only report your credit information
to one or two of the three agencies. Some choose to do so to save money, because
they have to pay to subscribe to each of the three credit bureaus. So obviously,
in that case, you will not see the same credit information reporting on all three credit reporting agencies' reports.
Another reason there is different personal information reported by the three agencies is when you apply for credit, many lenders will pull a credit report from only one of the
three credit reporting agencies.
As a result, your personal information will only be reported to
that particular credit reporting agency as an inquiry. So the information you provide
in your credit application is not updated to the other two credit reporting agencies.
Finally, the data processors at the three reporting agencies and at the creditors
simply make mistakes entering data into their databases. 76% of all credit reports actually
contain errors! So you can see why there would be different information in credit reports from each of the credit reporting agencies.