Equifax, Experian and TransUnion are the largest credit reporting companies nationwide. A report concerning customer experience with these companies revealed something not many consumers know: in consumer reports, credit card history accounts for the majority of information in those reports. Here are more surprising facts about this industry that will hopefully shed light on the confusion credit reports cause.
A large majority of disputes inside these reports are collections. This goes back as far as 2011, with a whopping 33-38 million items being reported in credit files when consumers reached out approximately 8 million or so times. Of those disputes? Less than half dealt with debt in collections – more than five times likely to be disputed than mortgage information.
2. FICO score
Our FICO scores are made up of five factors. The payment history, owed amounts, credit history length, new credit, and credit mix. Of those, a staggering 35% of the FICO score is because of payment history. Despite contrary belief, the FICO score is not affected by the level of education the user has; one’s education level has no impact on the FICO score.
3. Free Annual Report
By far, one of the most efficient ways to identify (and correct) errors and mistakes is to obtain a copy of our credit report, review it, and analyze it. Without doing so (which is what less than one in five people don’t do), mistakes and errors will remain unfixed and continue to wreak havoc on our credit report. This spells bad news for anyone who doesn’t know that having an error in your credit report means. The sad fact is: not many people know that they are entitled to one annual report a year. This is a complimentary (free) report, courtesy of the three major credit bureaus mentioned earlier (Equifax, Experian and TransUnion). There is absolutely no excuse not to get an annual report. They make it as easy and painless as possible for consumers to review their credit reports.
4. Large Companies
Most of the information on credit reports comes from a few large companies. Over 57% of the tradelines, via credit reporting companies, comes from the top 10 data furnishers. The top 100 furnishers provide over 76% of credit report data – which is a staggering number that should not be taken lightly. The reason this is surprising is because consumers generally believe that consumers themselves are responsible for most credit files. With large companies and banks being responsible for the most information in these credit files, it’s hard to imagine the impact that many consumers have in the credit report industry. This is why a Tradeline is so useful in many cases where companies are overwhelming.
There are a certain number of occupations that require a continual check up on an employee/applicant’s credit score to figure out which applicants have money problems. In fact, if you have bad credit, you may not even earn the position (let alone an interview). A few of these occupations include (but are not limited to) job positions as a parking booth operator, military personnel, CPA (or other accounting-related position), and the TSA.
Even though these facts remain, it’s wise to remember that not every report in this industry is calculated, analyzed or structured the same as any else. Credit reports contain information about activity and situations concerning your credit, and you’d do well to sign up for a complimentary annual report to educate yourself about where you stand.