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What is a credit bureau?

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βˆ™ 2006-08-11 23:52:56

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A credit bureau (U.S.), or credit reference agency (UK) is a company that provides credit information on individual borrowers. This helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate applied to loans. Interest rates are not the same for everyone, but instead are based on risk-based pricing, a form of price discrimination based on the different expected costs of different borrowers, as set out in their credit rating. Credit bureaus collect and collate personal financial data on individuals, from financial institutions with which they have a relationship. The data are aggregated and the resulting information is made available on request to contributing companies for the purposes of credit assessment and credit scoring. Given the large number of consumer borrowers, these credit scores tend to be mechanistic. In other words, the different credit bureaus collect data from a variety of sources and then apply a mathematical algorithm to assess the likelihood that an individual will repay a given debt given the frequency that other individuals in similar situations have defaulted. Given the mechanical nature of this calculation, an individual's credit score is highly dependent on the information input into the algorithm. If a credit bureau has collected inaccurate or misleading data, an individual's credit score could be adversely effected as a result. Consequently, most consumer welfare advocates advise individuals to review their credit reports at least once per year, in order to ensure that the reports are accurate. United States In the United States, the legal term for a credit bureau under the Federal Fair Credit Reporting Act (FCRA) is consumer reporting agency. Most credit history information is collected and kept by the three national credit bureaus, Experian (which purchased the files and other assets of TRW), Equifax, and TransUnion. These organizations are for-profit entities and possess no governmental affiliation. Experian handles its credit disputes in its "National Consumer Assistance Center" (NCAC) in Allen, Texas. It has its headquarters in Costa Mesa, California. Equifax subcontracts out most of its consumer relations. Telephone disputes or requests are diverted to a Canadian company/vendor named ICT. Mail disputes or requests sent to its Georgia post office boxes are opened by another vendor, Innasource, scanned to a computer file and then electronically sent to a subcontract vendor either in Montego Bay, Jamaica, or in the Philippines. Equifax is based in Atlanta. Trans Union handles its own disputes at the current time. It does so either in Pennsylvania or in California. Trans Union is based in Chicago. United Kingdom In the United Kingdom, the three credit reference agencies are Experian, Equifax and CallCredit, which was established in 2001. Most, banks and other credit-granting organisations subscribe to one or more of these organisations to ensure the quality of their lending. This includes companies who sell goods or services on credit such as credit card issuers, utility companies and store card issuers. Subscribing organisations are expected to provide relevant data to maintain the common data pool. Credit reference agencies are bound by the Data Protection acts, which require that data relating to identifiable individuals must be accurate, relevant, held for a proper purpose and not out-of-date. Individuals have a legal right to access data held on them. The activities of Credit Reference Agencies are governed under UK law by the Consumer Credit Act 1974.

2006-08-11 23:52:56
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Related Questions

How can a Wizard credit check be performed?

A Wizard credit check can be performed by going to a credit bureau and getting help from the credit bureau. Another way to do it is through an online credit bureau.

What will happen if you dont paid your credit card bills?

Your credit card company will report you to one of the three credit agencies, Experian credit bureau, Equifax credit bureau, and TransUnion credit bureau.

When was Japan Credit Bureau created?

Japan Credit Bureau was created in 1961.

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The population of Japan Credit Bureau is 2,755.

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When was Bureau of Federal Credit Unions created?

Bureau of Federal Credit Unions was created in 1934.

What are some benefits of getting a 3 bureau credit report?

A 3 bureau credit report has many benefits. A 3 bureau credit report can protect you from credit fraud by giving you quick access to all of your credit accounts. Another benefit of a 3 bureau credit report is that by getting information on your credit from 3 different bureaus insures no important information is left out.

Where can I find a free 3 credit bureau report?

You can find a free 3 credit bureau report on

When was Credit Union National Extension Bureau created?

Credit Union National Extension Bureau was created in 1921.

How many credit reports are you legally entitled to per year from each credit bureau?

You are legally entitled to three credit report per year from each credit bureau.

What is payment credit as a type of letter of credit?

A dispute letter to credit bureaus is written by an individual to the credit bureau over the some issue related to credit standing. The individual would need to be clear in his letter of dispute against that of the credit bureau, providing evidence where possible to proof the error on the part of the credit bureau.

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How does a private mortgage holder enter a favorable report on the mortgagee's credit?

A private mortgage holder normally does not belong to a credit bureau; therefore, can not report credit activity to a credit bureau..

Obtaining a report from the credit bureau can be done how?

There are many ways one might obtain a report from a credit bureau. The website, Annual Credit Report is the most reputable and does not require a credit card.

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Does a bad credit score in the US effect your credit score in Canada?

Technically, no. The Canadian credit bureau does not share information with the US credit bureaus. However, a Canadian creditor can certainly check with a US credit bureau to check your credit history.

When are the consumers entitled to a free credit report from a credit bureau?

When you have been denied credit or annually.

How can I receive an instant credit report?

Many smaller companies inquire into credit, but they do not report credit on a monthly basis. On a single-bureau credit report, you'll see the companies that have made a credit inquiry using that particular credit bureau: Experian, Equifax, or Trans Union. (A 3 bureau merged credit report is more appropriate if you want to see companies who have inquired into your credit from all three credit bureaus.)

Is there a international credit bureau?

There is no largely recognized agency that acts as an international credit bureau. The laws surrounding credit reporting are complex and would be very difficult to apply and enforce internationally.

What is the difference between credit agency and credit bureau?

A credit agency is a company that give you credit. for example : cibc, scotia bank other credit cards. bank loans, secured loans etc. A credit bureau, is where your credit information is kept, equifax etc. hope this helped.

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What agency can produce a report about your past and present credit activity?

a credit bureau

Can you get a free credit report by contacting the credit bureau?

Yes. Each credit bureau will allow one free credit report per year. You can access these by phone, written request through mail, or online at each credit bureau's website.