Each of the three main credit reporting agencies, or credit bureaus — Equifax, Experian, and TransUnion — are public, for-profit companies. They make money by collecting and aggregating consumer data, and they’re good at it. Really good. All together, they brought in over $10B dollars in revenue in 2019.
The goal of the big three credit reporting agencies is to collect information on people like you and me so they can sell it to their customers — their customers being the creditors who report all our information to the bureaus in the first place. The bureaus want to collect as much data as possible, regardless of how accurate that data may be, because the more data they have, the more money they make. And what kind of data do you think is the most valuable for the credit bureaus to sell to creditors, data on lower-risk borrowers who have good credit, or subprime data on more risky borrowers who have poor credit? You guessed it, subprime data is more lucrative for the credit bureaus to have because they can charge creditors more for it. Creditors, of course, love subprime data; they can make more money off people with poor credit by charging them high interest rates, so they are willing to pay top dollar for information on these consumers. (Remember, it’s crazy expensive to have bad credit!)
Each credit bureaus issues a unique credit report on you. Very often there are discrepancies in the information between reports. An account may be reported by TransUnion that is absent from your Experian and Equifax reports, for example. The bureaus are big, impersonal entities that do not consider it their responsibility to be compatible with each other.
Ultimately what you need to know about the credit reporting agencies is that your welfare is not their job. Or at least it’s not their priority. They aren’t concerned with the data on your credit report being accurate, and they definitely don’t care if that inaccuracy is causing damage to your credit and negatively affecting your scores — because that only results in them making more money!
The government does provide some oversight on the files the credit bureaus keep. It exists in the form of consumer protection laws, primarily the Fair Credit Reporting Act, or FCRA. According to the FCRA, if you find inaccurate, invalid, or outdated information on a credit report, you have the right to sue them if they refuse to remove the account. This is the law credit repair counselors invoke when they contact the bureaus on behalf of their clients. It’s an important one. We’ll come back to the FCRA, but there’s a bit more ground we need to cover first.
What kind of information gets reported to the credit bureaus, and what doesn’t?
Your credit reports include personal identifiers including your full name, date of birth, social security number, current and previous addresses, and current and previous employers. It also contains your current and previous credit account history: credit cards, auto loans, mortgages, personal loans, student loans, boat loans, RV loans, and the like. Certain other types of accounts are legal to report to the credit bureaus, but only if they go to collections; these include utility bills, medical bills, broken leases, payday loans, bankruptcies, and child support.
What does not get reported to the bureaus? Your income, cellular and internet bills, monthly utilities, your spouse’s credit accounts (unless you are a joint user or authorized user), tax data and legal judgements do end up on your credit reports. You will also not find specific information about your gender, race or religion, marital status, political affiliation, criminal record, or whether you are on public assistance.