Get to Know Your Credit Bureaus

So What are the Credit Bureaus?


In brief, credit bureaus are businesses that maintain files on basically every consumer who has ever been involved in some type of credit obligation, such as a loan or a credit card.  Credit files contain a myriad of information, including the amount of credit debt a consumer has accumulated, the type of debt and payment 
history.


When requested by a potential lender or creditor, this information is collected and packaged into what is known as a credit report.  Lenders and creditors use the information from the credit report to supplement any applicant information they have gathered in order to make an informed decision about a consumer’s creditworthiness.


Who are the credit bureaus?


Today there are three national credit bureaus that dominate the industry: Equifax, Experian, and TransUnion.  Each bureau owns or is affiliated with hundreds of previously independent local credit bureaus.  However, there are still many smaller regional credit bureaus that have no relationship with the three major bureaus.  


The credit reporting industry currently generates between $3 and $4 billion in annual sales.  The credit bureaus estimate that approximately 1.3 billion credit reports are run each year, and each bureau, on average, maintains approximately 225 million consumer credit files.


Credit bureaus collect information on consumers from lenders such as banks, credit card companies, department stores and even collection agencies.  The bureaus also draw information from public records to provide additional details regarding bankruptcies, judgments or liens.  Any company that makes lending decisions or 
manages financial accounts can voluntarily report back to the bureaus, and the bureaus are always soliciting information from these types of companies.


C. What are the sources of income for credit bureaus?


1. Financial institutions, insurance companies
2. Businesses who pay to report payment history
3. Companies who purchase qualified lists
4. Companies for employment checks
5. Credit monitoring services, repositories


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