How Do Credit Bureaus Work?


We all hear about the three main credit bureaus – Equifax, TransUnion, and Experian. They stand like gods over our financial lives, yet they are pretty mysterious. Just how do they work? What sort of business do they conduct? Are they there to help organize the aspect of borrowing, or do they simply run the borrowing machine? Whether you are considering opening your first line of credit or have owned several credit cards for years, understanding the inner-workings of the credit bureaus can help you keep a handle on your credit.

The credit bureau stands as your representative when you go to are looking to get a credit card or borrow money. Basically, they keep complete track of your financial history. They know how many lines of credit you have open, how much debt you have, how prompt you are about paying your credit cards and loans, and a lot more. When you apply for a loan, the lender will contact the credit bureau, who will then report to the lender about your financial situation. It’s the lender that ultimately decides whether or not to approve your loan based on this information.

This final call usually depends on your credit score. Your credit score is composed of lots of financial information, but it’s presented in one number. This number is what will be used to determine whether or not you are a good candidate for a loan, that is, if you are likely to pay the loan back.

This being said, it’s important to protect your credit, and therefore protect your identity. If someone gets a hold of some of your personally sensitive information, it would not be hard for them to delve a little deeper and totally ruin your credit score. This is where identity protection software comes in.

Identity theft protection software works by carefully monitoring for changes, disruptions, or abnormal behavior concerning your credit score, and they will often go through the three main credit bureaus to do this. Additionally, they provide credit reports from these credit bureaus, so you can be proactive in protecting your identity as well. Should someone irregular come up, you are notified so that you can address the issue directly.

While there are steps you can take to protect your identity, it’s ultimately a better option to look into identity theft protection software such as Identity Guard. Many come with very large insurance policies attached, offering more peace of mind when it comes to a dangerous identity situation.

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