The three main credit bureaus (also called credit reporting agencies) in the U.S. — Experian™, Equifax® and TransUnion®— are all used widely by credit card issuers , lenders and consumers for a variety of purposes. However, one bureau is not necessarily used more than another — it really comes down to the reason why they’re being used. Credit card issuers receive reports from the different bureaus when reviewing an application for a credit card. But how do you know which credit bureau is being used?
In this article, you’ll learn:
- Which credit bureaus the credit card issuers use
- Factors that go into deciding which bureau an issuer uses
- Why issuers pull reports from credit bureaus
- How to know which credit bureau an issuer uses
- What credit scores lenders use for mortgages
Which credit bureaus do issuers use?
When you apply for a credit card, your issuer — the person/company that supplies you with the credit card—will want to pull a credit report as a way to determine your creditworthiness. The issuer will likely pull from one or all three of the credit bureaus — Experian, Equifax or TransUnion. Let’s discuss why one bureau would be used over another below.
Factors considered
There are several reasons why a credit card issuer may choose to pull credit information from one bureau over another. These include:
- The agreement that a credit card issuer and a credit bureau share. Contracts with credit bureaus could include required quotas such as meeting a certain number of reports.
- Location that the credit issuer is in. In some states, an issuer may pull from one specific bureau, while in other states, the issuer may pull from multiple.
- Cost. Rather than utilizing all three credit bureaus, a credit issuer may choose to work with just one or two credit bureaus based on the cost of receiving those reports.
Why do issuers pull reports from credit bureaus?
Credit issuers and lenders utilize the three major credit bureaus for a few reasons. They may collect your credit report information to help determine your eligibility for a new credit card account or a loan. This information could also help to determine what your interest rate will be. The data provided by the bureaus in a credit check is essential because it may help your issuer or lender understand your creditworthiness.
The issuer may choose to pull two different kinds of reports. These are called “hard” and “soft” inquiries. These inquiries are dependent on the situation and may determine which credit bureau gets used. An issuer may run a hard inquiry when you are applying for a loan or credit card application. A soft inquiry happens when an issuer or lender wants to gather information for insurance or employment applications or for personal credit checks.
Your creditor or lender may feel more confident about approving you for a credit card or loan when you have a good credit score. A good credit score means that you are reliable with your payments and are a lower risk for the issuer to invest in. On the other hand, if you have a poor credit score, your creditor or lender may increase interest rates or deny your application for a card or loan .
An issuer may want to see that you have a good credit score and could pull credit reports from the three bureaus as a way to retrieve that score. Keep in mind that you can monitor your own credit score using tools like Chase Credit Journey® to better your chances of getting approvals.
How to know which credit bureau your issuer uses
If your bank provides you with a free credit report or credit score, you will likely be able to see which scoring model was used and from which credit bureau. You may also want to try contacting your bank directly to ask where they report your information. Keep in mind if you have multiple accounts at different banks that each of them may use a different bureau.
Additionally, a quick online search can help you see a list of which major credit card issuers use which of the three major credit bureaus for credit inquires. This information could be helpful for you to know as you’re about to apply for a credit card or loan, given the bureaus weigh factors slightly differently (more on this below).
What if I receive different credit scores?
It’s possible your credit score from one credit bureau could appear slightly higher or lower than the score you receive from another credit bureau. Don’t worry—as long as the numbers aren’t drastically different, this may mean that the credit bureaus use different scoring models or weigh their factors differently .
Keep in mind that each credit bureau may use the FICO® score or VantageScore® model for calculating credit scores, and your scores from each of the bureaus can be slightly higher or lower when compared against each other. This is because each scoring model weighs the factors differently. For example, your payment history takes up a larger percent of your FICO score than your VantageScore. The credit score ranges that each of the bureaus use also differ.
Does each credit bureau have their own credit score ranges?
Yes. In addition to different calculations and scoring models, the credit ranges also differ across the three credit bureaus. For example, the FICO credit score range for each of the credit bureaus are as follows:
- Equifax: 280-850
- Experian: 300-840
- TransUnion: 300-850
Examples of scores that mortgage lenders use
Let’s say you want to buy a house and apply for a mortgage. You’ll likely work with a lender who will help to develop a mortgage plan. As a part of determining what your mortgage looks like, a lender may request credit reports from each of the three credit bureaus. These reports may include credit scores, such as the FICO score model to generate a credit score. The most common FICO scores used for mortgage lending include:
- FICO® Score 2—uses data from Experian/Fair Isaac Risk Model v2
- FICO® Score 5—uses data from Equifax Beacon 5
- FICO® Score 4—uses data from TransUnion FICO® Risk Score 04
While these scores provide the lender with some insight into your financial health, keep in mind that there are plenty of other factors a lender uses to determine your eligibility, including your income, debts and loan amount.
In conclusion
Credit card issuers and lenders may use one or more of the three major credit bureaus—Experian, TransUnion and Equifax—to help determine your eligibility for new credit card accounts, loans and more. Understanding which bureau your issuer uses can be beneficial for when you're applying for cards and loans. By increasing your financial awareness about your credit reports and where they come from, you may be able to improve your credit score over time and increase your chances of getting approved.
As an expert in personal finance and credit reporting, I bring a wealth of knowledge and experience to shed light on the intricacies of the credit bureau system in the United States. I've delved deep into the workings of Experian™, Equifax®, and TransUnion®, the three main credit bureaus shaping the financial landscape.
First and foremost, let's explore the key concepts outlined in the provided article:
Credit Bureaus and their Usage:
1. Credit Bureaus:
- Experian™, Equifax®, and TransUnion® are the three major credit bureaus in the U.S.
- They are widely used by credit card issuers, lenders, and consumers for various purposes.
2. Credit Card Issuers' Use of Bureaus:
- When applying for a credit card, issuers may pull credit reports from one or all three bureaus to assess creditworthiness.
3. Factors Considered:
- Agreements between credit card issuers and credit bureaus play a role.
- Geographic location can influence the choice of a specific bureau.
- Cost considerations may lead issuers to work with one or two bureaus.
4. Purpose of Pulling Reports:
- Credit issuers use the bureaus to determine eligibility for credit cards or loans.
- Interest rates may be influenced by the credit report information.
5. Types of Inquiries:
- "Hard" inquiries occur during credit card or loan applications.
- "Soft" inquiries are used for insurance, employment, or personal credit checks.
6. Credit Scores and Approval:
- Good credit scores increase approval chances, while poor scores may lead to higher interest rates or denials.
7. Identifying the Bureau Used:
- Banks may provide free credit reports, indicating the scoring model and bureau used.
- Online searches can reveal which bureaus major credit card issuers utilize.
8. Different Credit Scores:
- Credit scores may vary slightly between bureaus due to different scoring models and weightings.
9. Credit Score Ranges:
- Each bureau has its own credit score range. For example:
- Equifax: 280-850
- Experian: 300-840
- TransUnion: 300-850
10. Mortgage Lending Scores:
- Mortgage lenders may use specific FICO® scores, such as FICO® Score 2, 4, and 5.
Conclusion and Takeaways:
Credit card issuers and lenders leverage the information provided by Experian, Equifax, and TransUnion to make informed decisions. Understanding the factors that influence the choice of a particular bureau, the types of inquiries made, and the variations in credit scores across bureaus empowers individuals to navigate the credit landscape effectively. By staying informed and monitoring their credit reports, consumers can work towards improving their credit scores and enhancing their financial well-being.
