Credit Bureau, Credit Report, and Credit Score

There are three major credit bureaus in the United States, Experian, Equifax and TransUnion. A personal credit report is a detailed history of a person’s home mortgage(s), car loan(s), student loan(s), and credit card loan(s), including their high limits, current balance, mortgage/loan start dates, and payment history. Lenders across the country rely on the credit reports the credit bureaus provide to determine the credit worthiness of borrowers. In return, the lenders supply the loan information and borrower payment history to the bureaus.

A credit score is a numeric score calculated by a credit bureau using sophisticated mathematical and statistical algorithms based on information contained in a credit report. The most commonly used credit score in home mortgage business is FICO score, which is produced by the scoring algorithm from a publicly traded company FICO. The FICO credit score range is between 300 and 850. The higher the credit score, the more credit worthy the borrower is, statistically-speaking. Since the credit records each bureau has on a particular individual usually vary from each other, the credit score each bureau provides would differ. When evaluating an application for a home mortgage, a lender usually use the median score of all three bureaus. When evaluating an application for a credit card, however, a lender usually just use a score from one credit bureau, depending on the lender’s preference to the bureaus.