Credit Bureau

Credit bureau summary: 

• Credit bureaus aggregate information about how you’ve managed borrowed money and generate credit reports. 

• The three major consumer credit bureaus are Equifax, Experian, and TransUnion. 

• Your credit reports are used to generate your credit scores. 

Credit bureau definition and meaning

Credit bureaus collect information about your credit accounts. This includes balances, your payment history, how long you’ve had your accounts, what kinds of credit accounts they are, and how often you apply for credit. The credit bureau receives this information from your creditors and from public records. They use it to calculate your credit score. Credit bureaus also track other information about you, such as your place of employment, past addresses, and whether you’ve filed for bankruptcy protection.

Key concept: Credit bureaus collect information about your credit history, as well as other publicly available data. They compile this information in your credit report. Each credit bureau has its own collection of information about you. They don’t share data with each other. Credit bureaus also calculate credit scores, based on the information in your credit report.

More about credit bureau

A credit bureau, sometimes called a credit reporting agency, is a company that collects information about you. That information is primarily related to your experience with credit accounts but it could also include the name of your employer, your past addresses, and public information like bankruptcies and certain kinds of legal judgments.

Credit bureaus use the information they collect to calculate your credit scores. Your credit scores tell lenders how likely you are to repay a debt in the future. The higher your score, the less risky you look. Higher credit scores typically make it easier to qualify for new credit accounts and better terms.    

Credit bureau: a comprehensive breakdown 

Here are the finer points of credit bureaus and how they work.

Three main credit bureaus

The nationwide consumer credit bureaus that you’re more likely to be aware of are Equifax, Experian, and TransUnion. 

There are dozens of others that specialize in collecting and reporting on certain kinds of data. For instance, some track your history with bank accounts, and others collect information about medical debts only. 

Data collection

Creditors don’t have a magic way to get the information that’s in your credit report. Your own creditors provide it. Each creditor decides which credit bureaus they will share updates with. One lender may send updates to all three major credit bureaus, while another sends a report to just one or two of them. 

That means you shouldn’t be surprised when the information contained in your credit reports at the different credit bureaus varies.

Credit reports

Your information is compiled in a credit report. Lenders don’t get free, unfettered access to all of the data that the credit bureaus have about you. Except in rare circumstances, you have to give your permission before anyone can ask the credit bureau for your credit report.

Credit scores

The credit bureaus use the information in your credit report to calculate your credit scores. The next time you check your own credit score online, you can try to notice which credit bureau is providing it. 

Credit bureau responsibilities

All credit reporting agencies in the U.S. are subject to the Fair Credit Reporting Act. They must give you access to your credit reports and the opportunity to dispute information you believe is inaccurate. 

For many years, credit bureaus only provided one free credit report per year. Now, however, they provide one every week (through annualcreditreport.com). 

The data collected and reported by the credit bureaus could affect your life. It affects whether you can get a loan and how much you’ll pay for it, how much you pay for insurance, whether you can rent a home, and sometimes even whether you can get hired. It’s in your best interest to learn how to engage with each credit bureau.