Credit Bureaus
The credit bureaus are the agencies that gather credit related information of consumers from various sources and share this information with the lenders to determine the creditworthiness of the borrowers. The information gathered by the bureaus is usually related to the borrowing and paying patterns. The lenders use this information to ascertain the risk in lending money to the consumers and check the paying capability of the borrower. This information helps them in deciding the interest rate and other terms of loan.
The information is gathered and collated from data furnishers, which include lenders, creditors, utilities and debt collection agencies, courts, etc. They provide information related to the payment history, delinquencies, tax liens or bankruptcies, etc. All this information is put together to give a credit score to an individual, which is calculated based on a mathematical algorithm.
There are three main national consumer bureaus: Equifax, Experian, TransUnion. There are commercial credit reporting agencies, such as Dun & Bradstreet and Experian. In the US the legal term for a credit bureau as per the federal Fair Credit Reporting Act is called consumer reporting agency. The process of collecting and reporting information must comply with the rules laid by the federal law. The Federal Trade Commission and the Office of the Comptroller of the Currency do the supervision of the credit bureaus and data furnished to them.
It is advisable to all the individuals to ensure that they review their credit report atleast once a year for accuracy. You may contact any of the credit bureaus to get this report free of cost. This helps you in not only understand the accuracy of the data quoted in the report, but also help you in repairing your creditworthiness by taking corrective measures.
