How credit bureaus make money

The three major credit bureaus, Equifax, Experian, and Transunion, store the credit information they get from creditors about millions of consumers around the globe. But how do the credit bureaus make money?

The bureaus mainly make their money from selling credit reports, selling credit services, and developing credit systems.

If you have any type of credit account, mortgage, or other loan type, your information is very likely in the hands of at least one of the major credit bureaus.

Equifax, Experian, and Transunion are the three major credit bureaus who collect data on consumers, which is reported to them by creditors. While each of these credit unions has its own sets of data, they generally operate in the same ways, and thus have the same ways to make money.

It may come as no surprise that credit bureaus primarily make money from credit reports and the data they collect. When creditors and lenders send data to the credit bureaus about consumers credit behaviors, they do so for free.

The bureaus may also collect free data through public records from courthouses or other sources. Additionally, they also collect data about rent and utilities payments from those who report it.

The bureaus then compile all of this data, organize it, and sell it as a credit report. They also sell data they collect in this manner.

Bureaus will sell a credit report in many circumstances, including:

Importantly, you need to agree to have your credit report sold to these individuals. While not doing so may mean you miss out on an opportunity, no one has the right to access your credit data without your permission.

Bureaus also make money by selling other credit data that is not strictly for lending or employment. This is typically for marketing purposes.

For instance, a credit company may want to send preapproval marketing emails to a specific group of people, such as people with no former bankruptcies and a good credit score.

The bureaus can sell these creditors partial information in this matter, so long as the information is used for a direct offer, in this case preapproval on a line of credit.

Creditors may also request data if they are currently managing an account. For instance, if they are deciding to raise or lower credit limits based on changes in a person’s credit report.

Credit bureaus also offer data analytics as part of their services. As they have a large amount of data at their disposal, credit bureaus are the perfect companies to provide these analytics. Companies such as insurance companies and financial institutions may hire the bureau to help them manage accounts, fight fraud, or even provide data that can help them acquire new customers.

The bureaus also use this data to create risk models, and can help companies make their own risk models.

These risk models could be everything from “How likely is this person to file for bankruptcy” to “How likely is it that this person will make a late payment in the next two years”. The wide range and vast history of the credit information these bureaus store gives them a unique insight into consumers.

Credit bureaus may also have other forms of income that come from credit-related products directly to consumers.

This may include purchasing a copy of your own credit report or scores based on the various scoring systems.

Bureaus also offer a subscription service that helps monitor a person’s identity to check for fraudulent accounts and lock the accounts in case of suspicious activity. These services help to protect you from identity theft.

Paid subscriptions may also be available which allow you to view your updated credit reports daily, as well as access to your scores based on any number of scoring systems.

Additionally, bureaus make money from educational products they sell to other companies.

The credit bureaus collect and store massive amounts of information on credit consumers. This is the primary way they make money, as the information itself is very valuable. Selling credit reports is a large chunk of their business, and everything else involves using the same data to create more value for others.