TransUnion is a credit bureau that collects consumer credit information and provides it to various businesses.
TransUnion is one of the three major credit bureaus in the United States. A credit bureau collects consumer financial information and shares it with lenders, insurance providers, employers, and other companies.
What Is TransUnion?
TransUnion is a consumer reporting agency that collects your information and sells it to entities or businesses that want access to your data. TransUnion provides your data in the form of consumer credit reports, which gives a clear picture of your financial risk.
The Union Tank Car Company, a railcar leasing operation, created TransUnion in 1968. In 1969, the parent company acquired the Credit Bureau of Cook County (CBCC). The company continued investing in technology and updating information on almost every market-active consumer throughout the 70s and 80s.
In 2002, TransUnion acquired the website TrueCredit. TrueCredit made it possible for TransUnion to enter the direct-to-consumer market. As a result, TransUnion can now help consumers protect and improve their credit scores.
What Are the Other Credit Bureaus?
In addition to TransUnion, there are two other major credit reporting agencies: Experian and Equifax. During the 1960s, there were more than 2,000 credit bureaus nationwide. But over time, there were fewer and fewer credit bureaus. The decline was due to computerization and business mergers.
Who Can See My TransUnion Credit Report?
Knowing that TransUnion and other credit bureaus sell your information sounds scary. But you don’t have to worry! The Fair Credit Reporting Act (FCRA) protects you by limiting who can access your personal data.
According to the FCRA, only specific people and entities can request your TransUnion credit report. In addition, the requestor must have a valid and detailed reason for viewing your information.
What Information Does TransUnion Collect?
Credit bureaus collect a lot of information to create credit reports. But what type of information can be seen? Knowing the kind of information that’s on your credit reports can help you better understand your
These are the five basic categories of data that credit bureaus collect:
Personal Information
TransUnion stays updated on your personal information by collecting and updating information on your name, address, Social Security number (SSN), and date of birth. Credit bureaus may also know your current and past employers.
Accounts
Credit bureaus have information on your various accounts. Suppose you have a retail credit card. TransUnion will know your account number, payment history, balance, credit limit, and date of account opening. In addition, every account will have one of these statuses:
- Current: An active account that you currently use.
- Closed: An old account you paid off and no longer have access to.
- Past-Due: An account that has a missed or late payment. The past-due status remains until you make the required minimum payment.
- Charged-Off: A closed account that a creditor deems a loss. This status will stay on your credit report for up to seven years, even if you pay the outstanding debt.
- Inactive: An account you have not used in a long time. Financial institutions may close inactive accounts, so use it or check your card’s terms and conditions to prevent closure.
Collections
When accounts go unpaid for an extended period, the lender may sell the account to a collection agency. Debt collection agencies help lenders with the collection process, or outright buy it from them.
Public Records
Public records, such as bankruptcies, judgments, and tax liens, will be visible on your TransUnion credit report.
Credit Inquiries
Applications that require a hard credit check will be on your credit reports. Some soft credit inquiries may also appear on your credit report, although they will not negatively affect your credit.
How Do Credit Reports Affect Credit Scores?
Credit scores are an essential tool that financial institutions and other companies use to determine your level of risk. The FICO score and VantageScore 3.0 are the most commonly used credit scoring models.
Both types of credit scores range from 300 to 850 points. Consumers with higher credit scores tend to have more financial advantages. But consumers with poor credit health—scores less than 670 points—tend to get higher interest rates and fewer loan options.
So how do TransUnion credit reports affect credit scores? The information found on credit reports directly affects credit scores. There are five key categories that make up your total credit score calculation.
Payment History
The most important factor for credit scores is your payment history. Payment history counts for 35% of your FICO score. Borrowers that demonstrate reliability are more likely to get loan approval and better repayment terms. But if a credit report shows late payments, obtaining approval for loans may be challenging.
The best way to build a good credit score is to avoid late payments. Borrowers can sign up for payment alerts, which are text messages or emails with their monthly payment amount and due date. You can also sign up for automatic payments by linking your checking account.
Amounts Owed
The total amount of debt you have affects 30% of your total FICO score. Carrying too much debt can prevent you from building a healthy credit history. But how much debt is too much?
Financial experts often advise borrowers to maintain a credit utilization ratio lower than 30% to qualify for loans. Your credit utilization ratio is the difference between your total credit card debt and your total credit limit.
Follow these steps to calculate your utilization ratio:
- Step 1: Add up your credit card balances and credit limits.
- Step 2: Divide your total credit card debt by your total credit limit.
- Step 3: Multiply your answer from Step two by 100.
- Step 4: Get your credit utilization ratio!
Length of Credit History
The length of your credit history makes up 15% of a FICO score. Unfortunately, this credit scoring factor is the only one you cannot improve overnight. Financial institutions view borrowers with long credit histories favorably.
A long credit history proves that you are capable of managing financial accounts. Meanwhile, short or unestablished credit histories can make you seem like a credit risk.
New Credit
Applying for new loans can affect your FICO credit score by 10%. When you submit an application to a business entity, they will likely run a hard credit check. Every hard credit check, or hard credit pull, deducts about five points from your total credit score. The general consensus among financial experts is that more than six inquiries per year are too many.
Credit Mix
Your credit mix affects 10% of a FICO score. Having revolving and installment accounts can improve your credit, but it is unnecessary. You can still get a strong credit rating with only one type of account.
How To Get a Free Credit Report From TransUnion?
Every consumer is eligible to get one free credit report from each of the three credit bureaus every twelve months.
To get your free TransUnion credit report, you can visit the Annual Credit Report website to view, download, and print your credit reports. You must complete a form with your personal information to get your identity verified. Afterward, you can choose which credit report(s) you want to access!
What if There Is an Error on My Credit Report?
You can file a dispute to correct a mistake if you obtain your TransUnion credit report and notice an error. Unfortunately, it’s not uncommon to find errors on a credit report. But luckily, federal law allows consumers to dispute false information.
You can file a dispute with TransUnion by visiting the website and submitting an online form. You can also call (800) 916-8800 if you prefer to speak directly with an agent. You will need to provide information about the error. Take note of the type of error, date, amount, and other relevant information.
What Is a Credit Report Freeze?
A credit freeze, also known as a security freeze, limits who can access your credit report. Credit freezes can protect you from identity theft and misuse of your data. Consumers can activate and deactivate credit freezes at any time without affecting their credit scores.
If you want to freeze your TransUnion credit report, sign in to your TransUnion online account and choose to start a credit freeze.
References:
Company History│TransUnion LLC
When did credit scores start?│SELECT
What You Need To Know About The Three Main Credit Bureaus│Forbes