What is TransUnion? A Closer Look at One of America’s Three Major Credit Bureaus

I will admit, I never really thought about credit scores before I started writing about financial services. But if I did, I would have characterized TransUnion and the other major credit bureaus (Equifax and Experian) as part of a surveillance system with Big Brother at the helm.

I mean, it’s easy to think that, right? TransUnion distills your personal information, financial data, and payment history into a credit report that judges you as a financial consumer. They’re always watching, recording every transaction. It can make you shudder just thinking about it.

As one of the three major U.S. credit bureaus, TransUnion distills your personal information, financial data, and payment history into a credit report.

That sounds ominous, but now I understand that credit reports and scores incentivize me to act in good faith as a consumer in return for better financial results. As you’ll soon see, TransUnion plays an essential role in our data-driven economy to give all of us the best access and services possible.

TransUnion collects consumer financial data to produce credit reports and generate credit scores. All three of the major credit bureaus perform similar services, but they are all private companies with unique histories and products.

They work the way they do because how you treat people who have loaned you money is a good predictor of your future financial behavior. You don’t have to be a genius to realize that a history of late payments and loan defaults says something negative about you as a borrower.

On the other hand, a pristine credit history from TransUnion and the other bureaus signals you’re an ideal credit customer.

Collects Consumer Data

Collecting data is TransUnion’s first responsibility. It reaches nearly every American consumer with a credit card — about 82% of American adults, or 218 million individuals, according to the Federal Reserve.

TransUnion partners with about 90,000 credentialed digital data furnishers to collect billions of monthly data points. Tops on the list of data furnishers are banks, credit unions, mortgage companies, auto dealers, finance companies, student loan providers, and other creditors who base their planning on past customer behavior.

TransUnion taps into data from rental property owners, insurance agencies, telecommunication firms, utility providers, and retailers, as well as public records like bankruptcy proceedings. 

It uses automation tools to verify this data and incorporate it into credit files nearly instantly, all while ensuring it meets quality standards. It controls encrypted data access according to the requirements of the Fair Credit Reporting Act (FCRA), which I’ll discuss more later, while keeping tabs on everything through regular audits.

Trying to visualize the complexity leaves me in awe of the analysts and engineers who make systems like these possible.

Compiles Credit Reports

Another name for a credit bureau is a credit reporting agency. The next step for TransUnion is organizing the raw data in your credit file into a credit report. It’s another awe-inspiring process of digital management and software engineering.

A credit report is almost like one of those intelligence packets spies receive in the movies when they’re about to accept a dangerous mission. Maybe that’s why I associated credit bureaus with Big Brother when I was younger.

Skip ahead to see what’s in your TransUnion credit report.

Provides Credit Reports to Lenders

TransUnion sells credit report access to creditors and others interested in learning about their prospective customers’ financial character. Relationships with thousands of data providers, plus an obsession with accuracy, security, and compliance, mean creditors and financial stakeholders put their decision-making trust in TransUnion.

Lenders and creditors trust TransUnion’s data to help them make decisions based on a consumer’s risk profile.

TransUnion credit reports impact lending decisions by transforming raw data into an actionable form. 

Loans are more expensive and less accessible to those with a bad credit history. Utilities and companies understand the risk potential of bad credit and may ask for a deposit before doing business with you. Whereas those with good credit will see more favorable borrowing terms.

Cutting-edge digital networking and analytics make TransUnion credit reports possible. But credit reports don’t allow decision-makers to measure individuals against a standard.

For that, you need to whittle things down to a score — a numerical assessment based on a standard model. Credit scores are kind of like school grades, except they’re three-digit numbers rather than letters.

FICO is the company that owns and administers the most widely used scoring model in the U.S. Each bureau licenses the right to use FICO’s scoring models, though they have also teamed up to create a FICO rival known as VantageScore.

Credit Score Variations

The bureaus may use the same models, but chances are they’ll each produce a different score for you. That’s because each bureau’s database differs slightly from the others.

The reason is that data providers don’t have to work with all three credit bureaus. No law or regulation requires them to. Some may report to only one or two bureaus or update each bureau at different times.

Scores differ as a result of these discrepancies. Something as simple as a late payment reported to TransUnion but not to Equifax or Experian could impact your score at each agency.

Impact on Credit Card Approval

Higher scores result in cheaper interest rates and better credit card terms — it’s as simple as that. But score variations between bureaus can be significant, and issuers don’t have to consider scores from all three bureaus (or any) when determining your loan amount and rate. 

If your FICO Score from TransUnion is significantly lower than your scores from the other bureaus, your best bet while negotiating with your lender is to hope they use the other two reports.

FICO Scores range from 300 to 850. Someone with a very high 780 score might obtain a credit card with a much lower interest rate, saving themselves plenty of money over the years if they decide to carry a balance. 

Someone with a 620 FICO Score may pay a much higher interest rate and have a lower credit limit on the same type of card.

The best way to increase your credit score is to clean up your credit history. The good thing is that it’s never been easier to understand and control the information on your TransUnion credit report. Here, I’ll explain step-by-step how to become a TransUnion credit report expert.

Obtain a Free Credit Report

I explained above that TransUnion partnered with Equifax and Experian to produce the VantageScore credit scoring model, a rival to the FICO Score.

The bureaus also teamed up to create AnnualCreditReport.com, a website where consumers may download their credit reports as often as once a week from each bureau. The limit was one report per bureau per year until April 2020, when the economic crisis due to the COVID-19 pandemic led the bureaus to offer weekly reports.

TransUnion’s Consumer Support page also links to your free weekly credit reports.

Read Your Credit Report

A typical TransUnion credit report contains:

• Personal information: Includes the last four digits of the individual’s Social Security number
• Employment history: Reveals a person’s finances in the context of their work patterns
• Credit summary: Lists the individual’s total, open, closed, and delinquent accounts and their balances
• Credit account details: Includes each loan amount, credit limit, loan balance, and payment history
• Public financial records: Bankruptcies, liens on loan collateral, and civil judgments
• Hard credit inquiries: Made by lenders (which can impact credit scores)
• Soft inquiries: Made for preapproved offers (which don’t affect credit scores)
• Collections activity: Includes original creditors and amounts owed

TransUnion does a great job listing accounts with partial account numbers and indicators of satisfactory status. If you’re downloading your report for the first time, it’s time to begin researching and documenting the information you find.

Look Out for Errors

Errors (or items you think may be errors) will jump out at you as you gain experience and knowledge about your credit history. Fortunately, it’s easy to dispute an item on your TransUnion credit report online (or by mail or phone) through TransUnion’s Service Center.

After you quickly create a TransUnion Service Center account online, you can manage and fix TransUnion credit report inaccuracies in the following areas:

• Personal info
• Accounts
• Collections
• Student loans
• Fraud
• Inquiries
• Credit scores

Select the items on your report that need another set of eyes and explain why you think they’re wrong. Remember that TransUnion will ask you for documentation such as payment receipts and bank statements, so have them ready or prepare yourself for a search.

Dispute investigations require up to 30 days to resolve, but you can log on to your Service Center account anytime to check your progress. TransUnion contacts each creditor for verification and deletes disputed credit report data when creditors don’t respond within 30 days.

Contact the TransUnion Fraud Department to report entries that are inaccurate due to fraud. TransUnion also allows you to freeze your credit report.

TransUnion continues to list items it finds to be accurate after an investigation. Contact your lender directly or submit a repeat dispute if you want to continue the discussion.

Naturally, credit card issuers have a very close relationship with TransUnion. Here, I’ll explain some of the technical and regulatory details associated with communication between card issuers and TransUnion.

How They Share Information

Banks, credit unions, and fintechs issuing credit cards are among those with the highest vested interest in understanding consumer creditworthiness and customer financial behavior.

The Fair Credit Reporting Act (FCRA) obligates all data furnishers to update and correct the consumer credit history information they share with TransUnion. The FCRA also obligates TransUnion and the other bureaus to apply security and compliance procedures (like those we discussed above) to ensure reports are accurate.

The Consumer Data Industry Association (CDIA) controls the digital procedures and formats data furnishers use to communicate with TransUnion and the other bureaus. CDIA digital protocols help TransUnion process data efficiently and securely according to FCRA requirements.

Your Credit Report Impacts Approval

TransUnion and the other bureaus have straightforward dispute procedures, but the person most in charge of your credit score is you.

Credit card issuers may check your TransUnion credit report directly when you apply, performing a hard credit inquiry that can cause a minor, temporary credit score drop.

Hard credit inquiries are also known as hard pulls. They can stay on your report for up to two years but rarely affect your credit for longer than a year. Lenders sometimes preapprove consumers for credit, using a soft pull that does not impact your credit score.

FICO and VantageScore’s scoring models weigh the following credit score factors differently, but all take the following information from credit reports into account:

• Payment history: Includes records of any late or missed payments
• Credit utilization: This takes into account how much credit you are using, which includes the relationship between your credit card balances and your credit limits (issuers consider a utilization ratio below 30% optimal)
• Length of credit history: Long-established accounts are an advantage
• Credit mix: Issuers look for a healthy mix of different loan types
• New credit: Records of recent hard credit inquiries

These factors weigh a little differently in each calculation, but payment history and credit utilization are the most important for both FICO and VantageScore.

Influence on Credit Limits and Interest Rates

If your score is relatively low, say around 620, you’re in the market for an entry-level credit card, such as a secured or starter card or a card for building or rebuilding credit. You may receive approval for a traditional unsecured card, but your limit will be lower and your interest rate higher than average.

The market constantly changes, but interest rates for those with excellent credit may range down into the lower teens, while rates for those with poor credit will invariably be in the mid-20s or higher.

Depending on the card and the issuer, typical limits for borrowers with mediocre credit scores range from $300 to $2,000. On the other hand, a score of around 780 positions you to consider premium cards with lower rates, more rewards, and better perks.

And the sky’s the limit when it comes to limits. Years ago, I reaped the benefit of all the work I did to understand my credit history and increase my scores when I landed my first high-end travel rewards card.

I also came to appreciate the value of the credit reporting and credit score system. As I disciplined myself to use credit more wisely, I helped increase credit availability.

Until you learned about TransUnion and the other major credit bureaus, you may not have realized that a lot of people are interested in how you handle your money.

Far from the Big Brother of my youthful imagination, TransUnion helps the credit system reach more consumers with better credit offers. If you haven’t already, get to know your TransUnion credit report and use the available tools to ensure it represents you accurately.