What's the Credit Bureau Role

Credit bureaus, also called credit reporting agencies, are big businesses in the credit industry. They play a major role in your financial life, so it’s important that you know who they are and what they do.

Credit bureaus collect credit data about consumers and, upon request, compile the information in a document called a credit report. Many companies you do business with send your account details to the credit bureaus periodically. The credit bureau in turn sells this information to other businesses that want to know how you’ve handled your accounts. In the United States, there are three major credit bureaus – Equifax, Experian, and TransUnion. Innovis and CoreLogic are two other credit bureaus that are less well known.

How Credit Bureaus Report Data

When you apply for a loan, the loan officer asks the credit bureau to send over your credit report. The loan looks over the credit report and your other application data and decides whether you’re a desirable loan candidate. If you’re approved for the loan, that lender will then start reporting your loan details to a credit bureau or maybe all three. Note that the credit bureau itself doesn’t approve or deny you for credit or loan products. Instead, they simply provide information that enables businesses to make an informed decision.

Credit bureaus keep several pieces of personal and financial data about you including: your name and aliases, date of birth, social security number, current and previous addresses, current employer, whether you’ve filed bankruptcy within the past 10 years, whether you’ve had a tax lien or lawsuit judgment within the past seven years, whether you’ve had a foreclosure or repossession within the past seven years, current balances on your credit cards and loans, original loan amounts and credit limits, recently made payment amounts, late payments made within the past seven years, and recent applications for credit.

Your credit reports with the credit bureaus aren’t necessarily identical. In fact, if you compare your credit reports side by side, you’ll probably notice differences. The data may be different because of the way each credit bureau collects and reports data. Or, entire accounts may be missing from your credit report because the business reports to just one bureau rather than all of them.

The Law for Credit Bureaus

Credit bureaus are required to follow a law known as the Fair Credit Reporting Act. One of the provisions of the FCRA is that the credit bureau report only accurate, verifiable, and timely data. The credit bureaus are required to investigate errors and remove information that’s found to be inaccurate, but you have to submit a dispute first. Disputes must be investigated and resolved within 30 to 45 days. Negative information, like late payments, can only remain on your credit report for seven years or ten years if it’s a bankruptcy.

The credit bureaus can’t show your credit report to just anyone. Businesses must have a “permissible purpose” to request your credit report. In many cases, the business must have your written permission or a court order to receive a copy of your credit report. The bureaus can allow banks and insurance companies to view a copy of your credit report for promotional purposes as long as you haven’t opted-out. You can visit optoutprescreen.com to have your name removed from or added to these promotional lists.

You have the right to request a copy of your credit report from the credit bureaus. A special website – AnnualCreditReport.com – has been set up to allow you to get a free annual credit report from the three major credit bureaus. Once you’ve ordered your annual credit reports for the year, you can also purchase a credit report from the bureau directly or from a third-party reseller.

If a business turns you down because of information on your credit report, you have the right to a free copy of that report. The creditor is required to give you the name and address of the credit bureau that provided the report and you, in turn, must order the credit report within 60 days. This “adverse action” credit report is addition to your annual credit report.

Source: The Fair Credit Reporting Act