Written by: Andrew Allen
Edited by: Austin Lang
Reviewed by: Ashley Fricker
If you’ve ever had your application for a loan or credit card denied, you may have gotten upset and blamed the lender. After all, your application looked good — it didn’t even have any typos on it. So, why didn’t the lender have more confidence in you?
The lender may have discovered something in your past dealings with credit that made it think twice about giving you a loan or approving you for a credit card. Lenders and creditors get that information from credit bureaus.
Equifax is one of the three major credit bureaus in the U.S. The company researches and compiles details about your credit and produces credit reports for lenders and other entities.
Equifax, the oldest major credit bureau, develops credit reports that determine your credit score and can play a big role in a lender’s decision to approve your application.
But before you go blaming Equifax for your rejected application, understand that it is only reporting facts about your financial history. If a company is creating reports that impact my finances, all I can hope is they treat me fairly and stick to the facts — even if those facts could use some improvement.
If you want to take a deeper dive into Equifax (I mean, who wouldn’t), just stick around. You can benefit from my research on how credit scores and reports can help you get approved for loans with favorable rates. You’ll also learn how to address any errors on your Equifax report and all about the other tools the company offers to help you protect your credit.
Credit Bureau Basics
The credit reporting agencies, or credit bureaus, might fly under your radar if you never need any loans or credit cards. But most of us do. The bureaus use information from your borrowing activity to create credit reports and scores that lenders use when weighing whether to offer you credit and at what rates.
The Big Three Credit Reporting Agencies
They say that “good things come in threes.” Well, in the U.S., so do the major credit reporting agencies.
Experian and TransUnion are the other two major credit bureaus that, along with Equifax, form the big three.
How Equifax Calculates Your Credit Score
Most of us received GPAs, or grade point averages, during our school days. Depending on how studious you were, GPA might be a four-letter word to you. Though, I mean, it isn’t — it’s an acronym. It only has three letters.
Credit scores are similar to GPAs. Just because you got an A on your Algebra quiz doesn’t mean your GPA skyrocketed. It takes consistent improvements to boost a GPA, just like it takes regular, responsible credit behaviors to improve your credit score.
Equifax offers a version of your FICO score, which is influenced by five factors:
- Payment History: This represents how you’ve managed credit payments. Payment history can be impacted by late or missed payments and how much you missed them. It accounts for 35% of your score.
- Amounts Owed: This measures your credit utilization, which is simply the amount of credit you’ve used compared to the total amount available to you. Amounts owed counts for 30% of your credit score.
- Length of Credit History: Lenders want to understand how you’ve managed credit over the long haul, not just recently. How long your credit accounts have been active contributes to 15% of your credit score.
- Credit Mix: Credit mix, which accounts for 10% of your score, measures the variety of types of credit, such as credit cards and personal loans, you’ve owned.
- New Credit: Also contributing to 10% of your score, this factor relates to new credit products you’ve opened and recent inquiries into your credit.
Just like with GPAs, it’s better to have a higher credit score than a lower one. The closer your score is to 850, the more likely lenders will be to give you loans at attractive rates.
VantageScore is another common credit score. Equifax partnered with Experian and TransUnion to create VantageScore in 2006 to compete with FICO scores. FICO scores are more widely used in the industry, but VantageScore has been growing in popularity over the years.
What Equifax Reports to Lenders
Equifax shares your credit report directly with lenders so they can make informed judgments on the risk of lending to you.
The company shares personal information, including your name and address, with lenders, as well as data about your credit accounts, including any accounts that have been passed to collections agencies.
Your Equifax credit report includes:
- Personal Identifying Information
- Your Trade Accounts (i.e, loans and credit cards)
- Collection Accounts
- Public Records
- Credit Inquiries
Equifax searches public records, such as bankruptcies and liens, and provides that to lenders too, so they have the whole picture.
How Equifax Impacts Borrowing Opportunities
If you ever want to see the facial expression of an incredibly bored person, then start explaining the role of credit bureaus to a 16-year-old. Minors don’t need credit, for the most part, so they don’t care.
But adults do. Need credit, that is; caring is an entirely different story. As we leave our childhood years behind, our need for loans that can help us pay for college, cars, and houses grows. The information Equifax reports to lenders has a big impact on our borrowing opportunities.
Loan Approvals
Just like a college admissions board reviews your GPA to get an idea of your academic credentials, a loan officer evaluates your credit background and credit score before issuing credit to you.
If you have an excellent credit score, you have better odds of being approved for the loan you want.
Enviable credit scores can also unlock doors to longer repayment periods and lower APRs. So be sure to manage your loans and credit card payments well to keep those doors open.
Credit Card Eligibility and Interest Rates
Your Equifax credit report and score also impact the credit cards you qualify for and the terms of those cards. Not only can you access better interest rates with a stronger credit score, but you may also qualify for cards with more bells and whistles.
Have you been eyeing that trip to Hawaii everybody says they’ll take at some point in their lives? An excellent credit score can help you qualify for credit cards with rewards, including points you can exchange for discounts on travel expenses.
How to Address Errors on Your Equifax Report
People make mistakes. And credit bureaus and their partners do from time to time, too. Fortunately, if you’re reviewing your Equifax credit report and you notice something that isn’t accurate, then you have options to get that error fixed.
Identify Potential Mistakes
One of the easiest errors to spot on a credit report is one relating to your identity. Make sure your report correctly captures your name, address, and other personally identifiable data.
Credit reports can also contain mistakes about your history of credit payments. Look closely to verify your Equifax report has accurate payment details and doesn’t include duplicate information. Also, double-check to see if balances and credit limits are reported correctly.
You can confirm information on your credit reports by comparing it to what’s on your credit card and loan statements.
How to Dispute Errors with Equifax
Most people don’t like to admit when they’re wrong, but Equifax isn’t “most people.” In fact, it isn’t a person at all. But you know that — you’ve read almost a whole article about them.
Equifax makes it simple to dispute errors you discover on your credit report. You can submit a dispute with the company online and check its status over time.
Follow the prompts to complete your dispute, starting with your personal information. Depending on the type of dispute, you’ll be required to supply supporting documents, such as your driver’s license and a utility bill, the account information with bank statements, and/or proof the account is incorrect.
You’ll receive a 10-digit confirmation code to check on the status of your dispute, which should be resolved within 30 days.
The Benefits of Correcting Errors
Disputing an error on your credit report might seem like more of a hassle than it’s worth. But one error can negatively affect your ability to access loans, just like one bad grade on a science project could hurt your GPA.
Equifax aims to resolve disputes within 30 days, and it will update your credit report if corrections are warranted.
You can get a free copy of your credit report each week. So take the time to review your reports and look for any errors to make sure you’re getting the credit you deserve for your responsible financial behaviors. Your accounts and resulting credit reports are typically updated monthly, and if a mistake is resolved, it could increase your credit score with the next update.
Equifax Services That Help Protect Your Credit Information
Like most companies, Equifax does more than one thing. If you think it is only reporting on your credit management, you should know about its other services.
Like the police, Equifax helps protect you from bad actors. It offers tools and services to help you protect your identity and stop thieves from opening accounts in your name.
Credit Freezes and Alerts
When something’s frozen in ice, it’s basically impossible to get out until the ice around it begins to melt. A credit freeze works similarly.
If you place a security freeze with Equifax, then lenders you don’t have relationships with can’t review any credit reports affected by the freeze. That means criminals will have a tough time opening new credit accounts in your name. You can temporarily or permanently unfreeze your credit whenever you wish.
A fraud alert is a milder step than freezing your credit, but it can still give you peace of mind. When you place a fraud alert through Equifax, it instructs lenders to get in touch with you if somebody tries to open a new credit account with your identity. This way, you can let them know it wasn’t you and freeze the bad guys in their tracks.
Credit Monitoring Services
When I was researching this article, I momentarily thought we were going to be in for a real doozy of an ending that took us from the staid world of responsible financial behavior to the ravaged battlegrounds of another dimension.
But then I realized I had typed “Credit Minotor” into the program I was using, and it corrected to “Credit Minotaur.” What a difference transposing two letters can make.
It might not be a maze-dwelling monster, but credit monitoring can still be an exciting final chapter of this saga (and a more useful one). Equifax provides credit monitoring services that notify you if there have been any changes to your credit report. If you’re notified, I recommend reviewing your report to make sure everything looks OK.
Equifax Plays a Prominent Role in Your Credit History
Equifax is a name to become familiar with if you’re serious about improving, maintaining, and protecting your credit. Lenders use their credit reporting and scores when deciding whether to lend you credit and on what terms.
Equifax’s tools can also help you protect your identity and keep an eye on your credit. When it comes to your finances, you don’t want to be lax. So don’t forget, you can get help from Equifax.
