March is Credit Education Month so we're talking about credit ALL MONTH!

According to my friend google, a credit bureau is a company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc.

I know most people are not fans of the credit bureaus especially after hearing about TransUnion and Equifax being fined for unethical practices but let's talk about what they actually do and how they make money.  I remembered when I first started learning about my credit, I felt like the credit bureaus were there to tell your mistakes and make you look bad but now that I have been on the other side of the credit report, I understand its purpose but there needs to be some improvements to the way they handle disputes process. Your creditors voluntarily report information about your payment history to the credit bureaus, typically every 30 days.  Since this is voluntarily all of your debt may not be on your credit report.  

The three major credit bureaus are:

Equifax started in 1898 under the name Retail Credit Company when a grocery store owner created a list of creditworthy customers and provided it to other business owners in the town.  They are based in Atlanta, GA and are traded on the New York Stock Exchange under ticker EFX.

TransUnion started in 1968 as the Union Tank Car Company as a railcar leasing company. The are based in Chicago, IL and they believe in using information to help people make better decisions.

Experian started in 1803 in the UK, when a group of tailors started swapping information on customers who didn't pay their debts. They are currently based in Ireland with employees in 37 countries and you can find them on periscope educating consumers on credit.

The credit bureaus do four things.  They provide credit information, they provide decision analytics, marketing data, and credit monitoring.  

Credit Information

Remember when I mentioned creditors voluntarily send information about you to the credit bureaus monthly.   Well, they only know how your payment history with them. When they want to know if you are creditworthy with other creditors they go back to the credit bureaus and pay to get the full picture of how you are handling all of your credit in one place (your credit report).  They don't just care about your relationship with them, they also care about your credit relationship with everyone else.

Decision Analytics

Credit bureaus provide companies (who paid for this data) with data to make better decisions when trying to grow revenue.  The type of data they provided is called customer management which helps the creditor provide new products to their customers without taking on additional risk by providing the creditor with their customer's credit activity and trends,  The credit bureaus also provide data to help the creditors acquire new clients. provide fraud protection, risk management and keeps corporations on top of regulatory compliance requirements

Marketing Data

They provide creditors with data on what consumers fit a particular criteria. So have ever received those credit card offers in the mail from a company you don't have a relationship with?  That company asked their credit bureau of choice to send them a list of consumers who meet this criteria.  That's where your junk mail came from. If you want to opt-out of these offers you can call 1-888-5-OPTOUT (888-567-8688) or visit www.optoutprescreen.com.  You can opt-out for five years of permanently (you will have to mail in a form for this option).  To opt back in just call or go to the website.

Credit Monitoring Services

This one is actually for the consumer.  If you have ever been on the website of the credit bureaus or even when you get your free credit report from annualcreditreport.com they alway try to upsell their credit monitoring services.  Each credit bureau charges a different amount for their services, currently, the prices are from $9.99 (TransUnion), 19.99 (Experian) and 21.99 (Equifax).

Now that we know who the credit bureaus are,  when was the last time you checked your credit report?  If you haven't pulled your credit report in the last year pull one of your reports to make sure there aren't any errors.

You can get a free copy of your credit report from annualcreditreport.com and as I stated earlier if you can sign up to get your credit report free monthly from Experian. You are only allowed to receive one free report from each bureau once a year so pull your report every four months. This allows you to keep an eye on your credit all year.

 If you are want to know how to protect your credit during times of uncertainty then check out this free guide.