First, about the credit score. There are probably hundreds of companies that provide some sort of credit rating. They all try to come up with some sort of formula that provides lenders and creditors with a number that shows how responsibly of a consumer you are. These companies look at your credit history and provide a rating, and that service is sold to banks, auto dealers, landlords, employers, etc.

But realistically there is only one credit score, known as the FICO Score. This is the number that is provided by the Fair Issac Corp, which is used by 75% of leading lenders. In other words, the FICO Score is the only one you really care about. This is the industry standard.

Now for the credit reporting agencies… they will sell you your credit score for a fee. There are many services that provide your credit score online, but you want to be sure what you are receiving is actually your FICO Score, since it is the one that the people who are doing a background check will also request.

If you’re wondering how the 3 credit reporting agencies differ, here is how they work…

There are 3 credit reporting bureaus: Equifax, Trans Union, and Experian. These agencies have the task of managing billions of transactions for millions of Americans. They try to accurately provide a report that shows your history of using credit over the past 7-10 years. If you opened a credit card 5 years ago, it should be on that report. If you were late on your mortgage or rent, it may show up on that report. If your car was repossessed, chances are it is on your file.

What determines the information that goes on that report is up to the creditors/lenders. They must report the information to the agencies, but they are under no obligation to do so. In other words, if you are late on a payment, they can choose whether or not to report that information. Furthermore, they can choose to submit that application to all 3 reporting agencies, or just one of them if they want.

What they are obligated to do, by law, is provide accurate and factual information.

That doesn’t however, mean that this always happens. Sometimes human error is made and the wrong information is reported or the bureau makes a mistake with listing this information on your report. As a result, it is quite common to have information on your report that doesn’t belong there, and it can hurt your score.

That’s why the best thing you can do it regularly review your credit report and score to make sure it is accurate.

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