Credit Bureau – What is It?

by : Ervien Budijatmiko

A credit bureau (U.S.), or credit reference agency (UK) is a company that collects information from various sources and provides consumer credit information on consumers for various uses. This helps lenders assess the feasibility of credit, ability to pay back the loan, and can affect the interest rate and loan terms. Consumers with poor credit history or court adjudicated debt obligations like tax liens or bankruptcies that will pay higher annual interest from consumers who do not have these factors.

In the U.S., credit bureaus collect and compile personal information, financial data, and an alternative to individual data from different data sources with the bureau called furnishers have a relationship. Data furnishers report their payment experience with the consumer to the credit bureau. Data provided by the furnishers as well as collected by the bureau and then collected into the credit bureaus data repository or files. The result is information that is provided to customers on request from the credit bureaus for the purposes of credit assessment, credit numbers or for other purposes such as employment or apartment rental consideration. Given the large number of consumer borrowers, the credit was likely mechanistic. Most consumer welfare advocates advise individuals to check their credit reports at least once a year, to ensure that reports are accurate.

Commercial credit reports and scoring also exist, which can be used to evaluate the possibility of paying creditors.

As credit increased though out the country, there arose a great need to issue reports concerning those who are not a good credit risk as well as those who are of credit worthiness.
Credit bureaus earn their profits by giving a computer readout showing a financial profile and credit history of any individual. These reports are requested by a lender or any credit issuing firm from which you or any individual have requested credit.

Most lenders will base their acceptance or rejection of your credit application on the information on your credit report. If your credit report shows that you have been reliable in the past, then in most cases credit is granted.

What if your credit report shows that you’ve defaulted on a particular credit account or you were constantly late with your monthly payments?

There are approximately 2500 credit reporting agencies in the U.S. It is your personal credit file, you should know what information the credit bureau is giving out concerning your name and your credit.

Source : Wikipedia

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