Credit Bureau (definition)
Credit Bureau
A credit bureau is an agency that gathers and stores credit history about consumers, and makes that information available to lending institutions. In the U.S., the three major credit bureaus are Equifax, Experian, and TransUnion.
The main purpose of the credit bureaus is to collect information from banks, merchants, landlords, government agencies, and other lenders, organize and file that information into credit reports for tens of millions of consumers, and make the information available to lending institutions that are evaluating your creditworthiness.
So, if the main purpose of a credit bureau to to main credit reports, what exactly goes into a credit report, and why do we care?
Contents of the credit report include:
- personal information such as name, current and prior address, social security number, date of birth, telephone number
- credit history - people you owe, such as credit card and credit lines established, mortgages, personal loans, as well as payment history and records of late payments.
- public records - tax liens, bankruptcies, court judgments
- record of inquiries - whenever someone checks your file, an entry is made so that you (and other prospective lenders) know when some is using the information to make a lending decision
- disputes - where you can make a claim about false information in the above categories
The reason that we care about the information in our credit report is that it controls our entire financial life and destiny. Whenever you apply for a credit card, auto loan, mortgage, insurance policy, etc., you'll most likely have the merchant access your credit report. They're looking for information to assess the risk of lending you money, so you really can't blame them if they're careful.
The credit report doesn't say if you're a good or bad risk, but it does contain information about your past employment history and personal information such as your social security number, current and previous address, past payment history, the amount of credit you've taken on, problems such as liens or bankruptcies, and the all important "credit score".
Another important part of your credit report is the "dispute" section. You are generally entitled to receive a copy of your credit report occasionally, either free or for a nominal charge, depending on what state you live in, and whether or not you've recently been denied credit. You should take every opportunity you have to review the report, because there may be something in the report that is incorrect, inaccurate, or out of date.
Examining your credit report, even if it's accurate, also gives you perspective about your financial situation, which is a good thing to do occasionally.
In case you notice an error in your credit report, you are entitled to file a dispute with the credit report, and they are obligated to place your dispute in your file, as well as investigate the situation and correct the report if appropriate. The three big credit bureaus operate independently, so you can assume the contents of each report might be slightly different.