Here is how you can understand, what's a credit score

In this video, you'll understand what's a credit score, explained by transunion 

Experian

Experian plc, formerly known as CCN Systems, is a global information services group with operations in 41 countries. The company employs 15,500 people with corporate headquarters in Dublin, Ireland and operational headquarters in Nottingham, England, Costa Mesa, California, US and São Paulo, Brazil. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

[edit]The company was founded by John Peace in 1980 in Nottingham as CCN systems, an information services business owned by GUS plc.

History

In 1996 GUS plc acquired the US credit reporting business Experian, formerly known as TRW Information Services, from Bain Capital and theThomas H. Lee Partners.^[4] GUS combined Experian with CCN. GUS retained the Experian name for its combined credit services subsidiary.^[5]

In 2004 Experian acquired CheetahMail, a business founded in 1998 that provided e-mail marketing software and services.^[6] In the same year Experian also acquired QAS, a supplier of contact data management and identity verification solutions.^[7]

In 2005 Experian became the first company to win the UK Business of the Year award twice, having also won in 2003.^[8]

In August 2005 Experian accepted a settlement with the Federal Trade Commission (FTC) over charges that Experian had violated a previous settlement with the FTC. The FTC's allegations concerned customers who signed up for the "free credit report" at Experian's Consumerinfo.com site. The FTC alleged that ads for the "free credit report" did not adequately disclose that Experian would automatically enroll customers in Experian's $79.95 credit-monitoring program.^[9][10]

In 2005 Experian acquired PriceGrabber for $485 million.^[11] Also in 2005, Experian acquired FootFall, an information provider to the retail and retail property industries:^[12] FootFall is now a part of Experian's marketing solutions division. Still in 2005, Experian acquired LowerMyBills.com for $330 million USD.^[13]

In September 2006 Experian announced its purchase of Northern Credit Bureaus, located in Quebec, Canada.^[14]

In October 2006 Experian was demerged from the British company GUS plc and listed on the London Stock Exchange.^[15]

In June 2007, Experian acquired an initial 65% stake in Serasa, the market leading credit bureau in Brazil and now the largest credit bureau in the world. The purchase price for the initial stake was $1.2bn. This was the first acquisition for Experian in Latin America.^[16]

In mid-2007 Experian acquired a number of software companies with products that filled gaps in their existing portfolio. The intention was to be able to offer Experian's customers an Experian-branded product for all phases of the customer lifecycle. These included:

• Emailing Solution, a French e-mail marketing company. The intention was to grow the existing CheetahMail business with the acquisition of this new client portfolio.^[17]

• Hitwise, an internet monitor that collects data directly from information service provider networks.^[18]

• Tallyman^[19] debt collection management software from Bristol-based Talgentra.^[20]

In January 2008 Experian announced that it would cut more than 200 jobs at its Nottingham office as it moved development work to India to reduce costs.^[21]

Experian shut down its Canadian operations on 14 April 2009.^[22]

Experian purchased RentBureau in June 2010, which houses rental payment histories on over 7 million US residents; this data will now be included in Experian US consumer credit reports as of January 2011.^[23]

In August 2010, Experian became the first CICRA licensed credit bureau to go live in India. Since then the company has provided Experian credit reports to lenders and consumers in compliance with the Reserve Bank of India’s (RBI) guidelines.^[24]

Experian purchased a majority stake in Techlightenment on 17 January 2011, as part of Experian's strategy to grow its digital marketing capabilities. Techlightenment is a data driven technology and marketing company based in the UK, which helps clients to leverage advertising through key social media platforms. Techlightenment will form part of the UK Experian Marketing Services Division.^[25]

In May 2011 Experian acquired a 98% holding in Computec S.A., a credit services information provider based in Colombia, for the equivalent of US$380m.^[26]

In June 2011, Experian acquired Medical Present Value, Inc. (MPV), a provider of data, analytics and software in the US healthcare payments market. Its products are used by healthcare providers to manage payments between patients, commercial payers (such as insurance companies) and government programmes.^[27]

In July 2011, Experian acquired Virid Interatividade Digital Ltda (“Virid”), an email marketing company offering email delivery, email based behavioural segmentation, real-time campaign reporting, mobile delivery and social media integration in Brazil.^[28]

In December 2011, Experian acquired Garlik Ltd, a provider of web monitoring services in the UK. Garlik helps consumers to protect themselves from the risks of identity theft and financial fraud.^[29]

In May 2012, Experian announced it had signed an agreement to sell PriceGrabber, its price comparison shopping business and North America online lead generation activities, which operate under the brands Classes USA and LowerMyBills to Ybrant Digital Limited, a digital marketing services business based in Hyderabad, India. ^[30]

[edit]Operations

Experian's principal lines of business are credit services, marketing solutions, decision analytics and interactive services. The company collects information on people, businesses, motor vehicles and insurance. It also collects 'lifestyle' data from on- and off-line surveys.

Experian provides services in North America, Latin America, UK and Ireland, Europe, Middle East and Africa and Asia Pacific and reports its financial performance across those regions. Activities in these regions are grouped into four principal activities: Credit Services, Decision Analytics, Marketing Services and Interactive.

Like the other major credit reporting bureaus, Experian is chiefly regulated in the United States by the Fair Credit Reporting Act (FCRA). The Fair and Accurate Credit Transactions Act of 2003, signed into law in 2003, amended the FCRA to require the credit reporting companies to provide consumers with one free copy of their credit report per 12 month period. Like its main competitors,TransUnion and Equifax, Experian markets credit reports directly to consumers. Experian heavily markets its for-profit credit reporting service, FreeCreditReport.com, and all three agencies have been criticized and even sued for selling credit reports that can be obtained at no cost.^[31][32]

Experian US handles its credit disputes in its National Consumer Assistance Center (NCAC) in Allen, Texas. You may contact the NCAC once you have a copy of your personal credit report by calling the number that is located on the personal credit report itself. Experian opened a second NCAC in Santiago, Chile during the summer of 2007. Many divisions of the Allen NCAC as well as several other business functions including software development have been relocated to the Chile location.

Experian provides regional data at nationalscoreindex.com which shows average credit scores by region and zip code as well as various other measures of household debt. The site does not indicate if it uses a FICO based credit score, the new VantageScore, or some other scoring model.

The company's largest operation is Experian North America, a consumer credit reporting agency that is considered one of the three largest American credit agencies along with Equifax andTransUnion.

[edit]Senior management

	role	salary	bonus	total
Don Robert[33]	Chief executive officer	$1,400,000	$2,370,000	$3,770,000
Paul Brooks (Deceased)[34]	Chief financial officer	£460,000	£779,000	£1,239,000

Equifax

Equifax Inc. is a consumer credit reporting agency in the United States, considered one of the three largest American credit agencies along withExperian and TransUnion. Founded in 1899, Equifax is the oldest of the three agencies and gathers and maintains information on over 400 million credit holders worldwide. Based in Atlanta, Georgia, Equifax is a global service provider with US $1.5 billion in annual revenue and 7,000+ employees in 14 countries. Equifax is listed on the NYSE.

History

Equifax was founded in Atlanta, GA, as Retail Credit Company in 1899. The company grew quickly and by 1920 had offices throughout the US and Canada. By the 1960s, Retail Credit Company was one of the nation's largest credit bureaus, holding files on millions of American and Canadian citizens. Even though they still did credit reporting the majority of their business was making reports to insurance companies when people applied for new insurance policies including life, auto, fire and medical insurance. All of the major insurance companies used RCC to get information on health, habits, morals, use of vehicles and finances. They also investigated insurance claims and made employment reports when people were seeking new jobs. Most of the credit work was then being done by a subsidiary, Retailers Commercial Agency.

Retail Credit Company's extensive information holdings, and its willingness to sell them to anyone, attracted criticism of the company in the 1960s and 1970s. These included that it collected "...facts, statistics, inaccuracies and rumors… about virtually every phase of a person's life; his marital troubles, jobs, school history, childhood, sex life, and political activities." The company was also alleged to reward its employees for collecting negative information on consumers.^[3]

As a result, when the company moved to computerize its records, which would lead to much wider availability of the personal information it held, the US Congress held hearings in 1970. These led to the enactment of the Fair Credit Reporting Act in the same year which gave consumers rights regarding information stored about them in corporate databanks. It is alleged that the hearings prompted the Retail Credit Company to change its name to Equifax in 1975 to improve its image.^[3]

The company later expanded into commercial credit reports on companies in the US, Canada and the UK, where it came into competition with companies such as Dun & Bradstreet and Experian. The insurance reporting was phased out. The company also had a division selling specialist credit information to the insurance industry but spun off this service, including the Comprehensive Loss Underwriting Exchange (CLUE) database as ChoicePoint in 1997. The company formerly offered digital certification services, which it sold to GeoTrust in September 2001. In the same year, Equifax spun off its payment services division, forming the publicly-listed company Certegy, which subsequently acquired Fidelity National Information Services in 2006. Certegy effectively became a subsidiary of Fidelity National Financial as a result of this reverse acquisition merger (See Certegy and Fidelity National Information Services for further information).

In October 2010, Equifax acquired Anakam, an identity verification software company.^[4]

Equifax purchased eThority, a business intelligence (BI) company headquartered in Charleston, South Carolina in October 2011. eThority is partnering with TALX, a St. Louis-based business unit of Equifax, and will remain in Charleston. ^[5]

The company has been fined by the Federal Trade Commission on two occasions for violating the Fair Credit Reporting Act. In 2000, Equifax along with Experian and Trans Union were fined US$2.5 million for blocking and delaying phone calls from consumers trying to get information about their credit. In 2003, the FTC took Equifax to court for the same reason and settled its lawsuit with the company for a fine of US$250,000.^[6][7]

[edit]Products

For most of its existence, Equifax has operated primarily in the business-to-business sector, selling consumer credit and insurance reports and related analytics to businesses in a range of industries.^{[citation needed]} Business customers include retailers, insurance firms, healthcare providers, utilities, government agencies, as well as banks, credit unions, personal and specialty finance companies and other financial institutions. Equifax sells businesses credit reports, analytics, demographic data, and software. Credit reports provide detailed information on the personal credit and payment history of individuals, indicating how they have honored financial obligations such as paying bills or repaying a loan. Credit grantors use this information to decide what sort of products or services to offer their customers, and on what terms. Equifax also provides commercial credit reports, similar to Dun & Bradstreet, containing financial and non financial data on businesses of all sizes. Equifax collects and provides data through the NCTUE, an exchange of non credit data including consumer payment history on telco and utility accounts.

From 1999, Equifax began offering services to the credit consumer sector in addition, such as credit fraud and identity theft prevention products. Equifax, and other credit monitoring agencies are required by law to provide US citizens with one free credit file disclosure every 12 months; the Annualcreditreport.com website incorporates data from US Equifax credit records.

Everything reported to Transunion : credit score

What's a Credit Score ? 

A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit reportinformation typically sourced from credit bureaus.

Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.

Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Credit scoring also has a lot of overlap with data mining, which uses many similar techniques.

Credit score, in main countries 

United States :

In the United States, a credit score is a number based on a statistical analysis of a person's credit files, that in theory represents the creditworthiness of that person, which is the likelihood that people will pay their bills. A credit score is primarily based on credit report information, typically from one of the three major credit bureaus: Experian, TransUnion, and Equifax. Income is not considered by the major credit bureaus when calculating a credit score.

There are different methods of calculating credit scores. FICO, the most widely known type of credit score, is a credit score developed by FICO, previously known as Fair Isaac Corporation. It is used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender. All credit scores have to be subject to availability. The credit bureaus all have their own credit scores: Equifax's ScorePower, Experian's PLUS score, and TransUnion's credit score, and each also sells the VantageScorecredit score. In addition, many large lenders, including the major credit card issuers, have developed their own proprietary scoring models.

Studies have shown scores to be predictive of risk in the underwriting of both credit and insurance.^[11][12][13] Some studies even suggest that most consumers are the beneficiaries of lower credit costs and insurance premiums due to the use of credit scores.^[12][14]

New credit scores have been developed in the last decade by companies such as Scorelogix, PRBC, L2C, etc. which do not use bureau data to predict creditworthiness. Scorelogix's JSS Credit Score uses a different set of risk factors, such as the borrower's job stability, income, income sufficiency, and impact of economy, in predicting credit risk, and the use of such alternative credit scores is on the rise. These new breed of credit scores are often combined with FICO or bureau scores to improve the accuracy of predictions. Most lenders today use some combination of bureau scores and alternative credit scores to develop a better insight into their borrower's ability to pay. It is widely recognized that FICO is measure of past ability to pay and that's why new credit scores that focus more on future ability to pay are being deployed to enhance credit risk models. L2C offers an alternative credit score that uses utilities payment histories to determine creditworthiness and many lenders use this score in addition to bureau scores to make lending decisions. Many lenders use Scorelogix's JSS score in addition to bureau scores since the JSS score factors job and income stability to determine if the borrower will have the ability to repay debt in the future. It is estimated that FICO score will remain the dominant score but in all likelihood it will always be used in conjunction with other alternative credit scores which offer new layers of risk insights.

Usage of credit histories in employment screenings has increased from 19% in 1996 to 42% in 2006.^[15]:1 However, credit reports for employment screening purposes do not include credit scores.^[15]:2

Americans are entitled to one free credit report within a 12-month period from each of the three credit bureaus, but are not entitled to receive a free credit score. The three credit bureaus runAnnualcreditreport.com, where users can get their free credit reports. Credit scores are available as an add-on feature of the report for a fee. This fee is usually around $10, as the FTC regulates this charge, and the credit bureaus are not allowed to charge an exorbitant fee for their credit score.^{[citation needed]} If the consumer disputes an item on a credit report obtained using the free system, under the Fair Credit Reporting Act (FCRA), the credit bureaus have 45 days to investigate, rather than 30 days for reports obtained otherwise.^[16]

Alternatively, consumers wishing to obtain their credit scores can in some cases purchase them separately from the credit bureaus or can purchase their FICO score directly from Fair Isaac.^[17]Credit scores (including FICO scores) are also made available for "free" through subscription to one of the many credit report monitoring services available from the credit bureaus or other third parties, although to actually get the scores for free from most such services, one must use their credit card to sign up for a free trial subscription of the service and then cancel before the first monthly charge. Until March 2009, holders of credit cards issued by Washington Mutual were offered a free FICO score each month through the bank's Web site. (Chase, which took over Washington Mutual in 2008, discontinued this practice in March, 2009.)^[18]Chase resumed the practice of offering a free FICO score in March, 2010 of select card members to the exclusion of the majority of former WAMU card holders.

Under the Fair Credit Reporting Act, a consumer is entitled to a free credit report (but not a free credit score) within 60 days of any adverse action (e.g. being denied credit, or receiving substandard credit terms from a lender) taken as a result of their credit score. Under the Wall Street reform bill passed on July 22, 2010, a consumer is entitled to receive a free credit score if they are denied a loan or insurance due to their credit score.^[19]

The FICO credit score ranges between 300 and 850. The VantageScore score ranges from 501-990.^[20]

The first step to interpreting a score is to identify the source of the credit score and its use. There are numerous scores based on various scoring models sold to lenders and other users. The most common was created by Fair Isaac Co. and is called the FICO score. FICO is a publicly-traded corporation (under the ticker symbol FICO) that created the best-known and most widely used credit score model in the United States. FICO produces scoring models that are most commonly used, and which are installed at and distributed by the three largest national credit repositories in the U.S (TransUnion, Equifax and Experian) and the two national credit repositories in Canada (TransUnion Canada and Equifax Canada). FICO controls the vast majority of the credit score market in the United States and Canada although there are several other competing players that collectively share a very small percentage of the market.

In the United States, FICO risk scores range from 300-850, with 723 being the median FICO score of Americans in 2010. The performance definition of the FICO risk score (its stated design objective) is to predict the likelihood that a consumer will go 90 days past due or worse in the subsequent 24 months after the score has been calculated. The higher the consumer's score, the less likely he or she will go 90 days past due in the subsequent 24 months after the score has been calculated. Because different lending uses (mortgage, automobile, credit card) have different parameters, FICO algorithms are adjusted according to the predictability of that use. For this reason, a person might have a higher credit score for a revolving credit card debt when compared to a mortgage credit score taken at the same point in time.

The interpretation of a credit score will vary by lender, industry, and the economy as a whole. While 620 has historically been a divider between "prime" and "subprime", all considerations about score revolve around the strength of the economy in general and investors' appetites for risk in providing the funding for borrowers in particular when the score is evaluated. In 2010, the Federal Housing Administration (FHA) tightened its guidelines regarding credit scores to a small degree, but lenders who have to service and sell the securities packaged for sale into the secondary market largely raised their minimum score to 640 in the absence of strong compensating factors in the borrower's loan profile. In another housing example, Fannie Mae and Freddie Mac began charging extra for loans over 75% of the value that have scores below 740. Furthermore, private mortgage insurance companies will not even provide mortgage insurance for borrowers with scores below 660. Therefore, "prime" is a product of the lender's appetite for the risk profile of the borrower at the time that the borrower is asking for the loan.

United Kingdom :

The most popular statistical technique used is logistic regression to predict a binary outcome, such as bad debt or no bad debt. Some banks also build regression models that predict the amount of bad debt a customer may incur. Typically, this is much harder to predict, and most banks focus only on the binary outcome.

Credit scoring is only closely regulated by the Financial Services Authority when used for the purposes of the Advanced approach to Capital Adequacy under Basel II regulations.

It is very difficult for a consumer to know in advance whether they have a high enough credit score to be accepted for credit with a particular lender. This is due to the complexity and structure of credit scoring, which differs from one lender to another.

Also, lenders do not have to reveal their credit score head, nor do they have to reveal the minimum credit score required for the applicant to be accepted. Simply due to this lack of information to the consumer, it is impossible for him or her to know in advance if they will pass a lender's credit scoring requirements.

If the applicant is declined for credit, the lender is also not obliged to reveal the exact reason why. However Industry Associations, such as the Finance and Leasing Association, oblige their members to provide a high level reason. Credit bureau data sharing agreements also require that an applicant declined due to credit bureau data is told that this is the reason and the address of the credit bureau must be provided.

Canada :

The system of credit reports and scores in Canada is very similar to that in the United States, with two of the same reporting agencies active in the country: Equifax and TransUnion (Experian, which had entered the Canadian market with the purchase of Northern Credit Bureaus in 2008, announced the closing^[6][7] of its Canadian operations as of April 18, 2009).

There are, however, some key differences. One such difference is that, unlike the United States, where a consumer is allowed only one free copy of their credit report a year, in Canada, the consumer may order a free copy of their credit report any number of times in a year, as long as the request is made in writing, and as long as the consumer asks for a printed copy to be delivered by mail.^[8][9] This request by the consumer is noted in the credit report, but it has no effect on their credit score. According to Equifax's ScorePower Report, FICO scores range between 300 and 900.

The Government of Canada offers a free publication called Understanding Your Credit Report and Credit Score.^[10] This publication provides sample credit report and credit score documents, with explanations of the notations and codes that are used. It also contains general information on how to build or improve credit history, and how to check for signs that identity theft has occurred. The publication is available online at the Financial Consumer Agency of Canada. Paper copies can also be ordered at no charge for residents of Canada.

Transunion

Type	Corporation
Industry	Business Services
Founded	1968
Headquarters	Chicago, Illinois
Website	www.transunion.com

TransUnion is the third-largest credit bureau in the United States, which offers credit-related information to potential creditors. Like major competitors Equifax and Experian, TransUnion markets credit reports directly to consumers.

History

TransUnion was created in 1968 by Union Tank Car Company as their holding company. Its credit business began with the purchase of Credit Bureau of Cook County (CBCC) in 1969. TransUnion was built from acquisitions of major city credit bureaus, with service agreements with local owners of bureaus which were not for sale.

In 1981, TransUnion was acquired as a subsidiary of Marmon Group, a holding company formed by Jay Pritzker and Robert Pritzker. It was spun off as a separate company under Pritzker control in 2005. The wealthy Pritzker family, most famous for owning the Hyatt hotel chain, began divesting the family's assets in late 2001 following the death of Jay Pritzker. Notable major divestitures include Hyatt Hotels Corp. public in 2009 and selling majority stake in TransUnion in 2010.

In April 2010, the Pritzker family, with Penny Pritzker as TransUnion Chair, sold controlling interest of TransUnion to a new majority owner, the Chicago-based private-equity firm Madison Dearborn Partners. Madison Dearborn Partners acquired 51 percent stake in TransUnion, and the Pritzker family maintained 49 percent ownership.

Today, TransUnion operates 250 offices in the U.S. and in 25 other countries. It is based in Chicago, Illinois.

On February 17, 2012, Madison Dearborn Partners and the Pritzker family sold the company to Advent International and Goldman Sachs Capital Partners. 

Controversy

In 2003, Judy Thomas of Klamath Falls, Oregon, was awarded $5.3 million in a successful lawsuit against TransUnion. The award was made on the grounds that it took her six years to get TransUnion to remove incorrect information in her credit report.

In 2006 -- after spending two years trying to correct erroneous credit information that resulted from being a victim of identity theft -- a fraud victim named Sloan filed suit against all three of the USA's largest credit agencies. TransUnion and Experian settled out of court for an undisclosed amount. In Sloan v. Equifax, a jury awarded Sloan $351,000. "She wrote letters. She called them. They saw the problem. They just didn't fix it," said attorney A. Hugo Blankingship III of Blankingship & Associates in Alexandria, Virginia.