Is My Credit Rating Determined by the 3 Credit Bureaus?

The three major credit bureaus in the U.S, compile credit information from many data providers including credit grantors such as banks, credit unions, finance companies, mortgage lenders, auto lenders, retailers and credit card issuers.  In addition, they compile information from collection agencies and public records from tax liens, judgments and suits.  These three compilers are Equifax, Experian and TransUnion and have been called credit reporting agencies (CRAs) or credit bureaus.  One of the myths is that the credit bureaus determine our credit rating. This is not correct. They compile and report the information but do not determine your credit rating.  Further, it’s up to credit grantors that are reviewing your credit reports to determine if they feel comfortable doing business with you, and under what terms.

Account ratings

These credit grantors report payment information to the credit bureaus and also report the rating.  The rating standards are set by the credit data industry, based on the length of time the account is past due.  The bureaus report the information provided by the credit grantors.  Below is the list of ratings and their definition.

Rate 0 is too new to rate, which is usually for a new account opened less than 6 months.

Rate 1 is current, which means the account is paid on time or within 29 days of the due date.

Rate 2 is not more than 2 payments past due or paid within 30 to 59 days.

Rate 3 is not more than 3 payments past due or paid within 60 to 89 days.

Rate 4 is not more than 4 payments past due or paid within 90 to 119 days.

Rate 5 is more than 4 payments past due or 120 or more days past due.

Rate 7 is a Chapter 13 bankruptcy.

Rate 8 is a repossession, which is using a vehicle.

Rate 9 is a charge off, which is usually a credit card balance.

You are usually given 21 to 25 days from the closing date on your credit card to pay your account.  To meet the definition of an account that is   ”rate 1″ or “current”, the account has to be paid within 29 days of the due date.  For example, an account with a closing date of November 6 is due on December 1; the account would still rated as current if it is paid by December 30, Even though it is rated 1, you will be charged a late fee, because you paid after the due date.  The amount of interest you pay is also based upon the average daily balance, which increases the longer you delay paying.  In addition, the interest rate you pay could increase, because you have not paid on time.

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Keep this in mind when you pay your bills.  It is best to pay them on time, so you can have a good rating, avoid late fees and higher interest rates.  You control your rating, unless there are errors on your credit report or you are a victim of fraud.  The length of time you are behind paying your bills by their due date determines your credit rating.  This is not the same as your credit score, but how currently you pay your bills contributes to your credit score.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at, the credit blogger for, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.