A credit bureau, also called a credit agency, is a firm that supplies data about the financial strengths and credit histories of individuals and businesses, usually to banks, credit card companies, retailers, and other lenders.
A credit bureau may be called a consumer reporting agency in the US, a credit reference agency in the UK, or a credit reporting body in Australia.
Companies that are deciding whether to grant a person or business a loan, and perhaps how much interest to charge or what size deposit to request, pay the credit bureau a fee for their information.
The credit bureau just provides data on individuals and companies, it does not decide whether applicants qualify for credit. That is done by the lender.
Credit bureaus cast a wide net when gathering data. Sometimes your details may not be accurate. It is your responsibility (not theirs) to make sure they get it right.
The credit bureau sends a credit report, which contains information about the person’s bill repayment history and the status of their credit accounts.
The report will show how often payments were made on time, what current credit arrangements there are, how much credit is being used, and whether a debt collector is collecting on money owed.
Credit reports might also include rental repayment data if the person is a property tenant. It may also contain public records, such as judgments, bankruptcies, and liens and give the lender insight into their financial status and obligations.
“It’s important to check your credit report regularly to ensure that your personal information and financial accounts are being accurately reported and that no fraudulent accounts have been opened in your name. If you find errors on your credit report, take steps to have them corrected.”
Americans can request a free credit report online at AnnualCreditReport.com.
The largest credit bureaus in the US are Equifax, Experian and TransUnion, and Experian, Equifax and Callcredit in the UK. They are for-profit private firms and do not share information with each other. This means details about you may vary slightly in each bureau.
Personal data, such as your name, address, etc., plus information on the age of your various credit accounts, may stay on your credit reports for ever (there is no expiration date).
In most countries, negative information stays on your credit report from 6 to 8 years. In the United States, bankruptcy data stays on record for ten years for Chapter 7 filings, and seven years for Chapter 13 filings.
Surveys have shown that more than half of all American adults have no idea what their credit score is.
The UK’s Money Advice Service warns that if you repeatedly apply for credit, you could be harming your chances of getting credit. Several credit searches may indicate you are having problems.
Individuals can order a ‘credit freeze‘, which means bureaus are not allowed to sell that person’s personal data. It is one of several ways to protect oneself from identity theft.
Video – What is a credit bureau?
Bill Ray, a certified financial consultant, explains what a credit bureau is, and how you can get them to correct any inaccurate information about you.