# The Three Credit Bureaus & FICO Scores ### **1. Overview of the Three Major Credit Bureaus** There are **three major credit bureaus** in the United States that collect and maintain consumer credit information: #### **Experian** • Provides **credit reports and scores** to lenders. • Offers **credit monitoring** and identity theft protection. • Uses data from various financial institutions, credit card companies, and lenders. #### **Equifax** • Maintains a comprehensive **credit file** for consumers. • Offers fraud alerts and identity theft protection services. • Issues credit reports that lenders use to assess **borrowers’ creditworthiness**. #### **TransUnion** • Collects and maintains **credit histories** of consumers. • Provides **credit scores and insights** to businesses and individuals. • Offers **dispute resolution services** for incorrect credit data. These bureaus **do not determine** whether you are approved for credit but provide the **information lenders use** to make decisions. ### **2. How FICO Relates to the Credit Bureaus** #### **What is a FICO Score?** • **FICO (Fair Isaac Corporation)** is the most widely used **credit scoring model** in the U.S. • It is based on **data reported by the three credit bureaus**. • **FICO scores range from 300 to 850**, with higher scores indicating lower credit risk. #### **How FICO Uses Credit Bureau Data** • Each credit bureau **independently collects credit information**. # Hard vs Soft Inquiries When monitoring your credit, it’s essential to understand the distinction between **hard** and **soft inquiries**, as they impact your credit score differently. ### **Hard Inquiries**: • **Definition**: Occur when a lender or creditor checks your credit report as part of a lending decision, typically when you apply for a mortgage, loan, or credit card. • **Impact**: Can slightly lower your credit score and remain on your credit report for about two years.  • **Examples**: Applying for a new credit card, mortgage, or auto loan. ### **Soft Inquiries**: • **Definition**: Occur when your credit report is checked for non-lending purposes, such as background checks or prequalification offers. • **Impact**: Do not affect your credit score.  • **Examples**: Checking your own credit score, prequalified credit card offers, employment verification. For a more in-depth understanding, you might find this video helpful:  # Checking Credit Reports In October 2023, the three major credit reporting agencies—Equifax, Experian, and TransUnion—permanently extended a program allowing consumers to access their credit reports once a week for free. This initiative, which began in 2020 during the COVID-19 pandemic, was initially temporary but has now been made permanent to promote financial health and transparency.  To utilize this service, visit [AnnualCreditReport.com](AnnualCreditReport.com), the only official site authorized by federal law to provide free credit reports. Regularly reviewing your credit reports can help you identify and correct errors promptly, safeguarding your financial health. Importantly, checking your own credit report is considered a soft inquiry and does not affect your credit score. This permanent extension enhances consumers’ ability to monitor their credit histories more closely, aiding in the early detection of inaccuracies or potential identity theft. Staying informed about your credit status is a proactive step toward maintaining financial well-being.