Credit Bureau
A credit bureau, more formally known as a consumer reporting agency, is a company that gathers information about consumers' credit and payment history and sells it in the form of credit reports to lenders, landlords, employers, and other parties with a permissible purpose.
In everyday usage, the term credit bureau refers to a company that collects and maintains information about consumers' borrowing and repayment activities. The more precise legal term under the federal Fair Credit Reporting Act is consumer reporting agency. A credit bureau that focuses on credit information is a type of consumer reporting agency. The three largest nationwide credit reporting companies in the United States are Equifax, Experian, and TransUnion. They are private, for-profit businesses and are not government agencies. They receive data from creditors, such as banks, credit card issuers, mortgage servicers, and collection agencies, as well as from public records like bankruptcy filings. This data is assembled into individual credit reports. Credit bureaus do not make lending decisions and do not determine whether a person qualifies for credit. Instead, they act as data aggregators. When a lender, landlord, insurer, or employer requests a credit report, the credit bureau provides it if the requester has a permissible purpose under the Fair Credit Reporting Act. The Act also gives consumers the right to obtain a free copy of their credit report from each nationwide credit reporting company every twelve months through AnnualCreditReport.com. Credit bureaus must follow accuracy and dispute-handling requirements. For example, if a consumer disputes information in a report, the credit bureau generally must investigate and correct or delete inaccurate or incomplete information. A credit report compiled by a credit bureau typically includes identifying information, a list of credit accounts with payment history and balances, public records such as bankruptcies, and a record of inquiries made by parties who requested the report. Not all creditors report to all three nationwide companies, so the information in a credit report from one company may differ from another. Credit bureaus may also sell credit scores calculated using scoring models, but the bureau itself does not create the score. The term credit bureau is often used interchangeably with credit reporting company, though the latter is more precise. There are also specialty consumer reporting agencies that track other types of information, such as rental history or check-writing history, but they are not usually called credit bureaus. It is important to understand that a credit bureau is not a regulator, a lender, or an adviser. It does not approve or deny credit applications. It does not provide credit counseling or legal advice. Consumers who find errors in their reports can dispute them directly with the credit bureau and with the creditor that furnished the information. The Consumer Financial Protection Bureau and the Federal Trade Commission provide educational resources about credit reports and the rights consumers have under federal law. The term credit bureau remains common in conversation, but the legal framework and official publications generally use the term consumer reporting agency or nationwide credit reporting company.
A lender might say it will run an application through a credit bureau, meaning the lender will request the applicant's credit report from one of the nationwide credit reporting companies to review the applicant's credit history.