What is TransUnion? A Closer Look at One of the Three Major Credit Bureaus in the U.S.

When I first started learning about credit and the role credit bureaus play in the financial landscape, I remember thinking there was something distinct about the name of one of the three major bureaus. 

If the name TransUnion gives you railroad vibes, you’re not far off. The company’s roots are connected to the railroad industry. And somehow, it made the switch from helping keep trains on the right track to ensuring individuals and financial institutions know if their finances are on the right track.

Today, TransUnion produces reports and credit scores that detail consumer credit history and become the foundation for credit and financing approvals. Its reports, alongside those from the other major bureaus (Equifax and Experian), show just how responsible borrowers are.

TransUnion is one of the three major U.S. credit bureaus that creates credit reports and generates credit scores that influence your ability to borrow money from lenders. 

Since borrowing money can be a catalyst to help you accomplish everything you want to in life, it helps to know how to improve your ability to borrow money at favorable terms. 

While I can give you all the information you need about TransUnion and how to review your reports, I can’t clean them up for you. But I will give you some tips on ways to spot errors and take action.

With millions of borrowers in the U.S., lenders would be in a bit of a jam if they had to roll up their sleeves and conduct research all on their own to determine the creditworthiness of anyone who applied for credit. Thankfully, lenders get a big assist in those efforts from credit reporting agencies.

The credit reporting agencies, also called credit bureaus, go over the details of your personal borrowing history to develop resources in the form of credit reports and scores. Lenders use these tools when weighing whether to offer you financing products, such as loans and credit cards.

The Big Three: Equifax, Experian, and TransUnion

“The Three Musketeers” is a 19th-century French novel about three swashbucklers who defend justice. I’ve never read the book, but I do commemorate the legacy of the musketeers from time to time by purchasing their namesake chocolate bars.

As mentioned, Equifax, Experian, and TransUnion are the three major credit bureaus in the U.S., working like the Three Musketeers of the financial world. Though the companies’ employees don’t engage bad guys with swords, they do report on the facts of your financial background with equity and fairness.

Why Credit Reports Are Important

If a stranger approached you on the street and asked for $1,000 that they promised to repay with interest over a period of time, you’d probably keep walking. Though loaning them the money and collecting the interest might sound like an easy payday, you don’t know if the stranger is trustworthy.

Lenders face a similar conundrum, except they’re usually approached by thousands of prospective borrowers, if not more, each year. 

The credit bureaus perform an invaluable service by developing reports that give creditors a uniform way to assess your past dealings with credit cards, loans, and other lending products.  

If your credit report shows you have a responsible track record of managing credit, lenders are more likely to approve you for a loan and offer you credit cards. On the flip side, should your credit report reveal a history of missing payment due dates, then you may be declined for the lending product you seek or be offered unfavorable rates.

No one wants to be defined by their worst moments. Sure, we all make mistakes from time to time, but hopefully we learn from them and improve. 

TransUnion aims to create a complete picture of your past credit activity so lenders can make informed decisions about offering financing to you. To do so, the credit bureau collects information about you from a number of sources.  

Personal Data

To avoid any instances of mistaken identities, TransUnion includes plenty of personal details on your credit report.

But don’t worry, it doesn’t know your favorite foods or that “MMMbop” is your guilty pleasure song.

The data it collects includes your name, address, date of birth, and any previous addresses you’ve used.

The company will also list your current employer on your credit report and any prior employers it’s able to locate. This can also help you identify any inaccurate or erroneous information on your reports, which you can have removed.

Credit Accounts and Payment History

TransUnion’s credit reports contain details about your past and current credit accounts, including any auto loans, credit cards, and mortgages you own or have owned.

When reviewing your report, you’ll see not only the names of your lenders, but the account numbers, the dates you opened the accounts, and any current balances on each of them.

TransUnion also details your payment history to your lenders, including any late or missed payments. Payment history is a big part of your credit scores, which is why it’s so important to make every effort to send your payments in on time.  

Public Records and Inquiries

TransUnion combs through public records to uncover other information that lenders may find useful when considering whether to lend to you and on what terms.

In this section of your report, the company includes data on bankruptcies and liens, which are legal claims that give lenders the rights to certain assets you own when you haven’t paid a debt. 

When you apply for a loan or credit card, the creditor will likely evaluate your credit report. This is called a hard inquiry, and TransUnion lists hard inquiries on your credit report. 

How This Information Impacts Your Credit Scores

If you’re a baseball fan, you know that a batting average is one of the key measurements people use to assess a batter’s effectiveness. If you’re not a baseball fan, prepare to impress your sports-fan friends with your newfound knowledge — you can calculate a batting average by dividing the number of hits a batter has by their total number of at-bats. For example, a player with 30 hits in 100 at-bats has a .300 batting average.

Like batting averages, credit scores are three-digit numbers. Lenders can use them to quickly determine your creditworthiness without getting bogged down in the details.

TransUnion provides a version of your FICO score, which relies on the following factors: 

• Payment History: Accounting for 35% of your score, this details how you’ve managed your credit payments. Payment history can be impacted by late or missed payments, so be mindful of those due dates. 
• Amounts Owed: Amounts owed counts for 30% of your credit score and measures your credit utilization, or the amount of credit you’ve used divided by the total credit amount available to you. 
• Length of Credit History: Contributing to 15% of your credit score, this factor allows lenders to see how long you’ve been using loans and credit cards. 
• Credit Mix: Accounting for 10% of your score, credit mix concerns the different types of credit products you’ve owned.
• New Credit: Adding to another 10% of your score, new credit deals with recent lending products you’ve opened and inquiries into your credit.  

As with a batting average, it’s better to have a higher credit score than a lower one. Get familiar with the factors described above to improve your score.

Just like the Three Musketeers teamed up to complete daring missions, the three credit bureaus partnered to create VantageScore credit scores. First launched in 2006, VantageScore credit scores aren’t yet as widely used as FICO scores, but some lenders rely on them to gauge a borrower’s responsibility with credit.

Most free credit reporting services will show you your VantageScore, rather than the more commonly used FICO.

It’s a good move to take a look at your TransUnion credit report to ensure your information is correct. In addition, reviewing your report can help you spot evidence of a criminal using your identity to open credit or loan accounts. 

Get Free Weekly Credit Reports

Making a habit of regularly getting your credit report and reviewing it sounds like a hassle, but it really isn’t. Each bureau provides access to your reports, and other services offer access to one or more.

You can head to AnnualCreditReport.com once per week to get copies of your credit reports from each of the three credit bureaus. 

This is a free service, but you won’t have access to your credit scores, just the reports. Checking your credit reports regularly can help you quickly spot any errors or signs of fraud and report them in a timely manner.

Look Out for Errors and Dispute Them

Things such as late payments can negatively impact your credit score, so you definitely don’t want inaccurate reports of those to show up in your reports. If you do notice anything that doesn’t quite look right, including signs of fraudulent activity, TransUnion provides a free and streamlined way to dispute your report online. 

The process: To get started with your dispute, set up a TransUnion account if you don’t have one already. Once you’ve logged into your account, go to the Dispute tab. You can then select what area or areas of your report to dispute. 

You can use TransUnion’s online portal to upload documents that support your claims and check on your dispute’s status. TransUnion can take up to 30 days to resolve a dispute, but most of them are handled within two weeks.

TransUnion’s role in your ability to access new loans and credit cards can’t be understated. Regardless of whether you’ve been approved or denied credit in the past, it’s likely that TransUnion played a role in the creditor’s decision.

How Lenders Use TransUnion Data

There are a lot of lenders in the U.S. I actually turned to Google to try to find the exact number, but none of the results answered my question, so that’s why I can only tell you that it’s “a lot.”

Although each lender may use unique underwriting practices, most of them turn to information supplied by the credit bureaus during their process of evaluating credit applicants.

If a lender or card issuer notices any major red flags on your credit report, they can deny your application. Or they could approve your application but give you unfavorable interest rates to compensate them for taking on the risk of extending credit to you. 

How a Good Credit Report Can Help You

So far, I’ve focused much of this piece on the negative impacts of a less-than-desirable credit report, but let’s enjoy some positivity as we draw toward the article’s conclusion.

Just as a relatively bad credit report can cause a lender to avoid offering you credit, a positive report can increase the chances they approve your loan or card application. Borrowers with clean credit reports also enjoy more favorable interest rates and loan terms. 

When you find yourself on the wrong side of a lending decision, don’t fret. Rejection is always disappointing, but when it comes to your credit, the power is in your hands to improve it.

The Three Musketeers used swords to overthrow their enemies. So take a cue from them and use tools to help you on your mission to improve your credit standing. 

Make time to review your credit reports each week and dispute any errors you find as soon as you can. When it comes to fixing those mistakes, the clock is mightier than the sword.