Best Credit Reporting
Based on In-Depth Reviews

Why check your credit report in the first place?

A study by the Federal Trade Commission found that one in five consumers had an error on at least one of their three credit reports. If they hadn’t reviewed or checked their credit reports, they would've never spotted the errors in the first place. 

The inaccurate information on these reports could have lowered their credit score. Lower credit scores could have meant paying thousands more in interest rates. In fact, someone with a fair credit score could end up paying more than $40,000 in interest over their lifetime compared to someone with a very good credit score. Consumers with excellent credit scores could pay even less--in a nutshell, your credit is your financial calling card, it can both open and close doors. 

Credit reports have also become essential tools beyond the financial world. Nowadays, your housing or employment status could be decided by your credit history; and maybe even your love life. A study by the Federal Reserve found that comparing your credit score with your partners’ can even help predict how stable your relationship will be.

So, it’s a well-known fact that excellent credit can benefit almost every area of your life. While reaching that milestone is not always easy, checking your credit report is a necessary step, and credit service companies can be a helping hand. 

In the first place, using credit reporting services can help you become more credit-conscious. Since they update frequently, they can help you stay on top of your credit history, identify inaccurate information and get a better understanding of how you could improve your debt management strategies. 

“Good credit is actually essential to access a lot of different opportunities in our day-to-day lives. We tend to think about the importance of credit as access to a mortgage loan … [but] credit impacts a lot of other aspects beyond just the ability to get a mortgage or other high dollar loans,” said Carmina Lass, Chief Program Officer at Credit Builder Alliance—a national nonprofit network that serves as a bridge between smaller nonprofit organizations and the major credit bureaus to help people with poor or no credit build financial health.

“They [credit reporting services] can serve a great purpose in terms of helping people stay connected to their credit history,” believes Lass.

Credit reports: What are they and who makes them?

A credit report is a detailed history of your credit usage and debt. They reflect your payment habits, how much you owe, and how long your credit accounts have been open.

Credit reporting agencies, or credit bureaus, are the companies in charge of collecting people’s credit information and creating their reports. These are then used by financial institutions, such as banks or credit card issuers, to determine if, how much, and on what terms they should extend credit to you. 

The three big dogs of the credit reporting industry

Equifax, Experian, and Transunion are the most prominent credit reporting agencies. Their status results from the immense amount of data they store from consumers. According to the Consumer Financial Protection Bureau, they have credit information on more than 200 million adults, and receive data from approximately 10,000 different entities. It is also estimated that the major bureaus receive information on over 1.3 billion credit accounts monthly. 

The major credit bureaus are not the only ones keeping tabs 

In addition to the three major credit bureaus, there are also some lesser-known, specialized credit reporting agencies that focus on collecting information to meet the needs of specific industries. Last January, the Consumer Financial Protection Bureau published an updated list of more than 40 reporting agencies in the United States. These are some of them and what they may have on you according to the CFPB:

 Innovis: their reports are very similar to ones created by the three major bureaus. The difference will mainly be the amount of information they have about your credit history. Not all financial institutions will report to Innovis like they do with Equifax, Experian, and Transunion. 

ChexSystems: checking and savings account activity.

Certegy: check writing histories.

LexisNexis Risk Solutions: real estate transactions, ownership data, liens, judgments, bankruptcy records, professional license information, and historical addresses on file.

Microbilt/PRBC: credit, bill payments, employment, bank account information, property records, court judgments, address, and phone numbers.

CoreLogic Teletrack: payday lenders, rent-to-own businesses, furniture stores that offer financing, auto finance, and leasing companies.

Clarity Services: a part of Experian. They state on their site that their “data source is derived from a variety of financial service providers, including auto financers, check cashers, prepaid card issuers, short-term installment lenders, peer-to-peer microlenders, small-dollar credit lenders, online small-dollar credit lenders, telecommunications, and many more.”

National Consumer Telecommunications and Utilities Exchange (NCTUE): is operated by Equifax. They state that they collect “data such as payment and account history, reported by telecommunication companies, pay TV, and utility service providers that are members” of the agency. 

The Fair Credit Reporting Act  

The Fair Credit Reporting Act (FCRA) is a federal law that regulates how credit information is managed and collected by consumer reporting agencies. It also establishes who can have access to your credit report and under what circumstances. Basically, it aims to make sure the information included in credit reports will always be accurate and used fairly.

The law was passed in 1970 to stop credit reporting agencies like Retail Credit Company—Equifax’s original name—from including information regarding social, political and even sexual preferences in people’s credit reports. 

Since then, three acts have helped strengthen the FCRA: the Fair and Accurate Credit Transactions Act of 2003, the Dodd-Frank Act of 2010, and The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018. Together they have given people more control over the security and accuracy of their credit reports.

The Consumer Financial Protection Bureau (CFPB) The Federal Trade Commission (FTC) are in charge of enforcing the act. 

Your rights under the FCRA

Sure, the FCRA--along with the three supplementary laws of 2003, 2010, 2018--dictate how consumer reporting agencies collect and share information, but sometimes mistakes are made and rules are broken. If you want to stay on top of your credit report, this is a summary of your rights according to the CFPB:

You are allowed to see what is in your credit report: You are entitled to get a free copy of your credit report once a year from each major credit bureau, on request. Specialized credit reporting agencies must also provide you with a yearly report. You can also ask them for your credit score, but this won’t be free. Make sure to ask which credit score they’ll provide. It’s possible it won’t be the one used by creditors.

You are entitled to an additional free credit report in special instances:

• An unfavorable action is taken against you based on information in your report

• You’re a victim of identity theft

• The file contains inaccurate information

• You’re on public assistance

• You’re unemployed and expect to apply for employment within 60 days

You can dispute inaccurate or incomplete information: Both credit reporting agencies and the entities (lenders or creditors) that provide them with information must correct inaccurate or incomplete information. If you discover an error and notify it, they must investigate the situation. If the information reviewed is in fact a mistake, it must be eliminated from the report, typically within 30 days.

You may place a security freeze on your report for free: A security freeze prevents creditors from opening lines of credit without your authorization. This is especially useful if you are a victim of identity fraud. You can also place a fraud alert, which remains on your report for a year and requires that creditors take extra steps to verify your identity before opening a new credit line in your name. The fraud alert can be extended for 7 years if you are a victim of identity theft.

The only person that doesn’t need permission to access your report is you: Your credit report can only be accessed by people or companies that have a valid need to see it and have your written consent. For instance, creditors, insurance companies, employers, and landlords may need to check your report before doing business with you.

You can opt out of receiving prescreened credit offers: You know those credit card offers you receive without asking? You get these because credit bureaus include your information on a list provided to creditors. These offers are based on certain creditworthy criteria you may have. You may opt out of receiving these offers by visiting www.optoutprescreen.com or calling 1-888-5-OPT-OUT (1-888-567-8688).

You can file legal action against violators: If a credit bureau, consumer reporting agency, employer, or any person or entity you are doing business with violates the FCRA, you might have the right to sue.

Banks are not the only ones who care about your credit history

Financial institutions are not the only ones who use your credit report to figure out how trustworthy you are when it comes to paying your dues. Insurance, utility, cellphone, internet companies, and even government agencies, may also want to check it out. 

Your credit history helps these companies determine how reliable you will be with payments, if they should ask for a security deposit, how much to charge you for an insurance policy, or if you are eligible for government welfare.

“If you have poor credit or no credit at all you may have to pay a deposit for those types of services that somebody with good credit or excellent credit wouldn’t have to pay,” mentioned Lass. 

It’s also likely that a landlord or property manager will ask for a credit report before renting out a property. “Many landlords look at credit history as one of their factors in terms of acceptance an applicant,” confirmed Lass. A survey from SmartMove, a tenant background screening service offered by Transunion, found that 90% of landlords run credit checks on prospective tenants.

Employers might also be interested in taking a look. A survey by the National Association of Professional Background Screeners, in partnership with HR.com's Research Institute, found that 16% of employers check every candidate’s credit report, while 31% check at least some candidates. 

Potential employers are likely to be particularly interested in your report if you’re applying for a job in finance, for instance. After all, no one wants their money being managed by someone who seems like they don’t manage their own very well. Keep in mind though, employers are required by the FCRA to have your written permission before checking.

If you’re denied employment, a lease, an offer, or are given a worse deal than the one you originally applied for because of your credit report, you must be notified. The FCRA requires that the notification explain the reason you were denied and which credit bureau generated the report used against you. You also have the right to request a free copy of the credit report that was used, within 60 days of being informed.

Mastering the basics

Getting to know your credit report and monitoring it closely is the first step towards better financial opportunities. However, if you need to build your credit and/or significantly bump up your score, it’s important to master the basics— specifically, how to read a credit report. Also, what credit scores are, how they’re calculated, and what it takes to have an excellent one.

So, what are credit scores then?

As we’ve mentioned previously, a credit score is a three-digit “grade” credit bureaus give you based on your credit history. Since this grade can determine so many of your life’s big financial decisions - from buying a home to getting the job you want - it’s important to check your credit history regularly and be aware of what’s being taken into account when calculating your score. 

Many people aren’t aware that they don’t have just one credit score, just as they don’t have one single credit report. FICO, for instance, has over 50 distinct credit score types corresponding to different industries--and there are other, lesser-known and lesser-used scoring models as well (TransRisk, Experian’s National Equivalency Score, Credit Xpert Credit Score, CE Credit Score, and the Insurance Credit Score used by insurers). 

Credit scores — at least in the two most popular scoring models, FICO and VantageScore —usually range from 300 to 850, with 300 considered extremely poor and 850 excellent. The higher the number the more creditworthy you’re thought to be. People in the higher end of the scale will not only qualify for most loans and credit cards, but will also be offered the lowest interest rates.

FICO Score

The FICO Score was created by the Fair Isaac Corporation and is considered the most widely used credit score model. In fact, FICO states they are “used in more than 90% of lending decisions.”

FICO has developed different versions of their score throughout the years. As a result, you have more FICO scores than you probably imagine.

The company says their most widely used version is the FICO Score 8 even though Score 9 is already available. These two versions analyze your credit report information from the three main bureaus, and come up with a single score. 

Other FICO scores are developed for specific industries. The FICO Auto Score aims to provide a more comprehensive score for auto-financing, for instance, and the FICO Bankcard Score is for credit card applications. 

These are very similar to the primary score models with just a few modifications which are supposed to measure the risks commonly associated with specific industries.  Each model is itself divided into several other versions, depending on which credit bureau information it uses.

There’s also the FICO Score 3 which is used primarily for credit card lending. 

Beacon 5.0, FICO Risk Score Classic 04, and Fair Isaac Risk Model v2

These three are somewhat commonly used additional FICO score versions. Unlike Score 8 which uses all of your credit reports, they each take into account the report of only one bureau.

The Beacon 5.0 uses your credit report from Equifax, the FICO Risk Score Classic 04 from TransUnion, and the FairIsaac Risk Model v2 from Experian.

The FICO Score 2 (also known as Fair Isaac Risk Model v2) only uses your credit report information from Experian. FICO Score 4 (also called FICO Risk Score 04) uses data from TransUnion. Finally, the FICO Score 5 (also called Beacon 5.0) is based on Equifax.  

VantageScore

VantageScore was developed through an alliance between the three major credit bureaus. Unlike FICO, there are only two versions of the system currently in use: VantageScores 3.0 and 4.0. The 3.0 version is the most used score, and it’s also the one shown by most free credit reporting services.

VantageScore fulfills the same purpose as a FICO score—grading your creditworthiness—but they do present some differences when it comes to their calculating formula.

VantageScore only asks for about a month of credit history and one account with registered activity within the last two years. They also treat late payments a bit differently— FICO treats them all equally, while VantageScore will be tougher on late mortgage payments.

To calculate your score, FICO requires that you have at least a six-month-old credit history. They also require that at least one of your accounts have some activity registered with one of the major credit bureaus within at least six months. 

Educational Credit Scores

The three major credit bureaus also have their own scoring models. Equifax has the “Equifax Credit Score”,  Experian has the “PLUS Score”, and TransUnion has the “TransRisk New Account Score.” According to the CFPB, these credit scores are not typically used by creditors and are only meant for educational purposes.  

So, which score will my creditor use?

There’s no specific way of knowing which credit score your lender or creditor will actually use--most will look at the versions they consider best fits their needs.

Lass recommends asking your creditor, “the best way [to know]… is to just inquire with the creditor to see if they would share what credit database they’re pulling from and what score they're using to evaluate.” However, be aware that there’s no guarantee that they will share this information with you. 

It’s likely you’ll only find out which score they used if you’re denied an offer you applied for and are sent the rejection notice required by law.

Lass recommends that people educate themselves about the different kinds of credit scores available before buying one through credit reporting services, “the score that they are getting might not be the same score that their creditor is using…That doesn’t mean the score is inaccurate, but it’s different.”

Back in 2017, TransUnion and Equifax were fined by the Consumer Financial Protection Bureau for tricking consumers into buying credit scores without being clear regarding which one they were selling and how useful they really were. “You can use those [scores] for tracking your general credit progress, but if you’re about to apply for credit … it’s good to figure out what score the creditor is using,” advised Lass. 

FICO outlines the versions of their scores most commonly used in certain credit lending decisions:

·      Most widely used: Score 8

·      Auto-lending: Score 8, 2, 4, or 5.

·      Credit cards: Score 3 or Bankcard Score 8, 2, 4 or 5.

·      Mortgages: Score 2, 4 or 5

Another good tip, if you’re searching for the best mortgage options, is to concentrate on your FICO score. A 2018 report found that there’s been an increase of more than 20% in VantageScore usage, but this rise doesn’t apply to the mortgage market.

More ways of getting your credit score besides credit reporting services 

The CFPB made a guide to inform consumers of how they can get free access to their credit reports. The guide outlines, credit card issuers and other creditors that offer free credit to their customers—they sometimes also offer scores to the general public. There are also nonprofit credit and financial counseling services that offer free credit scores.

As always, make sure to determine which credit score they offer. 

Excellent Credit:  What actually goes into it?

Credit reports and scores will inevitably vary from person to person, but there are some steps everyone can take to improve their credit health. Both FICO and VantageScore consider the same factors when scoring you. Learning what these factors are, and how to manage them, can help almost anyone build a good credit history or raise their score. 

In addition to making a habit out of checking your credit reports regularly, you have to really understand what it includes, and how that information can make or break your credit score. Following, we outline some simple steps to take to raise your score.

Pay your bills on time

This one might seem obvious, but it’s crucial. After all, credit scores are meant to determine how trustworthy you are in paying back what you owe. If you have a lot of missed payments, creditors will see you as a risk. Period. Consistently paying your debts on time is a must.   

Creditors report a late payment once if it’s 30 days late. After that, late payments will be marked as 90, 120, or 150 days late. The most severe late-payment mark is a charge-off. A charge-off happens when so much time has gone by that creditors think you won’t ever pay them back.

If you do miss a payment, not to worry! Pay it off as soon as possible and try not to miss another one again. Creditors won’t usually hold a single missed payment against you, and your credit score will rise again once you get back to your healthy credit habits.

The 30% or less rule 

Using 30% or less of your available credit makes you stand out before creditors. This shows that even though you have a larger sum available, you don’t need to tap into it. The implication is that you manage your money well, whereas someone maxing out their cards will likely end up with multiple late or missed payments.

The goal is to use 30% or less of your available credit limit across all your cards and on each one individually. For example, if you have five credit cards, and together they add up to $10,000 in credit limits, you should aim to use $3,000 or less. Take the same precautions with each one of your credit cards as well. 

There are financial experts that believe using 10% or less of your available credit is even better. In fact, research from FICO found that Americans with credit scores between 800 and 850—the exceptional score range—used around 4% to 10% of their credit. 

Mix it up  

Creditors like to see how well you manage different kinds of debt. By paying up different kinds of debt responsibly, you show them exactly that. 

There are two types of credit accounts: revolving accounts and installment loans. Revolving accounts give you access to a certain amount of credit and, as you pay it back, you can keep drawing from it again and again. Your credit limit can increase or decrease over time depending on your payment history. For example, a credit card issuer could decrease your credit limit if you have a history of paying late, or they could offer you a higher credit limit if you’ve made all your payments on time. 

Ideally, you could pay your balance in full every month (which will help you raise your credit score), but you can also make just the minimum payments required by the creditor. The latter option, however, means that you’ll end up paying much more due to the accrued interests. Aside from credit cards, personal lines of credit and home equity lines of credit (HELOC) are also revolving accounts.  

Installment loans, on the other hand, let you borrow a certain amount and make fixed payments over time until both the principal and interest are paid off. Once you send the last payment, your installment loan account is automatically closed. Home mortgages, home equity loans, auto loans, student loans, and personal loans are all installment loans.

Oldies are definite goodies (as long as they don’t have a dark past)

Even though it’s not as important as paying on time or how much of your credit limit you use, the length of your credit history does matter. Your credit age is analyzed based on an average of how long all of your accounts have been open, when you opened your oldest account, and when you opened your newest account. They also consider how long it’s been since you’ve used your accounts. A long history of positive credit usage across your accounts will speak highly of your debt-management habits. 

Open a couple of new credit accounts, but not too fast

Yes, having different types of credit accounts helps boost your credit, but don't rush to open up a lot of them in a short amount of time. This is even more important if your credit history is short. Opening up new credit accounts lowers your average credit age.

Additionally, trying to open a new credit account results in hard inquiries. A hard inquiry, or hard pull, happens when a creditor takes a detailed look into your credit report to decide if they want to give you a new line of credit or not. Too many hard inquiries on your credit report over a short period of time could make creditors think that you’re eager to open new credit accounts because you’re having money trouble. 

• Rate shopping exception: 

When you want to buy a house or car, you might search around for a loan offer that best fits your budget. Credit reporting companies get that. To deal with this, they classify hard inquiries done in a short period of time as “rate shopping.” 

FICO’s rate shopping period is 45 days. In this period you can search for a mortgage, auto loan, or student loan—to name just a few installment loans—without worrying about a drop in your score. You can’t search around for the ideal credit card though. VantageScore’s period is smaller—14 days—but they do allow rate shopping for credit cards.

Inquiries done during these time frames would count as a single inquiry.

Dispute anything that shouldn’t be in your report

Even if you manage your credit accounts diligently, keep in mind that your credit score could be seriously affected if incorrect or inaccurate information is included in your credit report. 

“It’s worthwhile to find out what information the various credit bureaus have about you and whether or not it's accurate,”  remarked Susan Grant, Director of Consumer Protection and Privacy at the Consumer Federation of America—an association of non-profit consumer organizations whose stated goal is to advance the consumer interest through research, advocacy, and education. 

Some common mistakes found in reports  include:

·       Personal information unrelated to you

·       Credit accounts that are not yours

·       Duplicate accounts

·       Late payments that you actually made on time

·       Closed account reported as open

·       Incorrect account balance

Whatever the case may be, if it’s wrong, it can be disputed and it must be deleted from your report. To dispute mistakes, the Consumer Financial Protection Bureau advises to first contact the credit bureau which produced the report where you found the mistake. Then, you should contact the creditor who provided the inaccurate information.

It’s possible the negative information was added by mistake, but it’s also possible that it might be due to more serious situations such as identity theft or fraud. Identity theft complaints were the second most received by the FTC in 2017. If this is the case, you could benefit from identity theft or credit monitoring services.

Make sure old, negative information is removed

If for any reason you fail to make payments on a credit card or loan, that information will be added to your credit report even if you ended up paying later on. The late payment—or delinquency—will continue to appear on your credit report for seven years. Foreclosures also stay on your credit report for seven years.

If an account does not receive a single payment for over 180 days, it’s going to be marked as a charge-off. Charge-offs are accounts that creditors consider won’t be paid—at least not in the near future. By this point, your account has been probably sold to a debt collector. Just like late payments, charge-offs also remain on your credit report for seven years.

Bankruptcies are the most troublesome of the negative information bunch. They stay on your report for up to ten years.

Judgments and tax liens can be included in credit reports but,  since 2017, credit bureaus changed their requirements for including them. If the information can’t be verified with name, address and Social Security Number (or date of birth), it won't be included in an individual's credit report. In fact, many people experienced a boost in their credit scores as judgements and tax liens were removed from their reports because they couldn't be verified.

When you go through your credit report, make sure to verify the dates of any negative information that may show up. If it’s outdated, contact the credit bureau who is reporting the information to have it removed. 

Take Advantage of Credit Freezes and Fraud Alerts

The Equifax data breach is evidence of how our information is never entirely safe, but there are tools we can use to take matters into our own hands and make it less vulnerable. It’s always a good idea to be extra careful, especially when it comes to sensitive information like the one included in your credit report.

“While it’s very important that credit bureaus have security, it’s also important that consumers have good tools to use in case their information is exposed,” said Grant.

Credit freezes and fraud alerts are essential credit security tools. Grant considers them one of “the best protection consumers can have against … [some of] the most common types of identity theft.”

• Credit freeze: keeps creditors from accessing your credit report. Since no one can access your report, no one can give you new lines of credit. So, if someone stole your identity and tried to open a credit account with your information they wouldn't succeed. When the time comes when you need to access your report, you can provide the PIN you chose when initially placing the freeze and it will temporarily unfreeze. Unfreezing your report is sometimes also called thawing your report.

• Fraud alert: when a fraud alert is placed on your report, creditors must take extra steps to verify your identity before opening any new credit account on your name. If someone tries to open an account with your information, a creditor must contact you and inform you of the situation. Fraud alerts remain on your report for one year. If you were a victim of identity theft, that period can be extended to seven years. Credit bureaus also offer credit lock services. Just like freezes, locks block access to your report whenever they are enabled. Grant explained “there’s not really a difference” between what each one does.

The only difference between a lock and a freeze is how they are placed and lifted. Credit locks are advertised basically as being user-friendly credit freezes. Instead of contacting the bureaus to have them freeze or thaw your report, you can do it yourself through the bureau's site or mobile app. 

The issue with credit locks is that they are not enforced by law, so each credit bureau manages their service on their own terms. The services sometimes include arbitration clauses and class-action waivers that make you give up your right to sue if the lock service ever fails to do what it’s supposed to.

Additional credit security tips

Aside from regularly checking your credit report, Grant recommends checking your monthly account statements for any irregular payments. “Monitor your own accounts… If there’s any problem with a charge you didn’t make or an amount being incorrect, you can correct that with the creditor so they can insure that the information they share with the credit bureaus is accurate.”

Making sure your personal computer has an adequate security system installed is also necessary. “If you’re going to be checking any kind of financial accounts online you  want to make sure that fraudsters can't hack into your computer,” mentioned Grant.

Lastly, you must be vigilant of what information you share as well as with whom. “You have to be very careful yourself no to potentially expose your information to account takeovers; … you also have to be vigilant against things like phishing,” said Grant. 

What To Watch Out for With Credit Reporting Services

Check Your Credit Report From Each Bureau

Free credit reporting services provide information from a single credit bureau. Remember that there are still two other reports you absolutely have to check out. It’s possible the information across all three reports could be slightly different. 

Creditors don’t always send your information to all the bureaus. It’s possible they don't even send your information to any of the three. This is the reason why your TransUnion report, for example, could be showing one additional open credit account than the one from the other bureaus. 

Most importantly, the credit report you’re seeing could be squeaky clean while the one from the other bureaus includes inaccurate or outdated information. These errors could potentially affect your credit health. It’s of utmost importance to compare the information across all three reports. Anything that shouldn't be there can and must be removed. 

Keep in mind, though, that information won't be removed if you can't provide enough evidence to the bureaus of its inaccuracy.

Read the fine print

There are many credit reporting services out there that aren’t completely clear about their advertised offers. The “get your credit reports and scores from all three bureaus for $1” is one of those confusing offers. 

People jump at the idea of such a cheap offer without realizing the $1 payment is actually just covering a 7-day free trial. Once that period ends, the companies begin charging a subscription fee, often upwards of $20 a month. If you don’t check your credit card statements regularly, you could end up paying a lot more than that one dollar.

We recommend you avoid credit reporting services that offer trial periods if you’re not sure how their trial cancellation policies work, or if you’re likely to forget to cancel it. We found numerous reviews online where people said they tried cancelling their trials online and over the phone and still ended up getting billed.

Another important detail is to be clear on what type of credit scores they’ll show you.