Credit Bureau

What Is a Credit Bureau?

A credit bureau (credit reporting agency in the U.S.) collects, compiles, and sells information about individual credit histories to lenders and other authorized users. Bureaus do not decide whether you receive credit; they provide reports and scores that help creditors assess credit risk.

Key takeaways
* A credit bureau gathers and maintains consumers’ credit information and supplies reports and scores to lenders.
* The three major U.S. credit bureaus are Experian, Equifax, and TransUnion.
* Credit scores (most commonly FICO and VantageScore) summarize credit risk and influence loan approval and interest rates.
* Consumers are entitled to protections under federal law, including annual access to credit reports and rights to dispute errors.

How credit bureaus work
* Data collection: Bureaus receive information from banks, credit card issuers, mortgage lenders, debt collectors, vendors, and public records (e.g., court filings).
* Compilation: They combine this data into a credit report that lists accounts, payment histories, balances, inquiries, and public records.
* Scoring and delivery: Using scoring models, bureaus or score providers assign numerical credit scores and deliver reports/scores to lenders, employers (when authorized), insurers, and consumers.

Credit scores and scoring systems
* FICO: Created by Fair Isaac Corporation, FICO scores are the most widely used in U.S. lending. There are multiple FICO versions tailored to different lending types. Scores commonly range from 300–850.
* VantageScore: Developed collaboratively by the major bureaus as an alternative scoring model. It also typically uses a 300–850 scale (earlier versions used different ranges).
* Differences: Models weigh factors differently (payment history, amounts owed, length of credit history, new credit, and credit mix). FICO scores are calculated from data at a single bureau, so your FICO score can differ among bureaus; VantageScore’s approach aims for greater consistency across bureau reports.
* Impact: Roughly 90% of U.S. lenders use a FICO score or similar model to inform lending decisions. Higher scores generally lead to better loan terms and lower interest rates.

Major credit bureaus
* Experian, Equifax, and TransUnion are the three primary U.S. credit bureaus. Each maintains its own databases and may report slightly different information, so your reports and scores can vary between them.

Consumer rights and regulation
* Fair Credit Reporting Act (FCRA): Regulates consumer reporting agencies and gives consumers rights to accuracy, privacy, and dispute resolution.
* Fair and Accurate Credit Transactions Act (FACTA) of 2003: Provides additional protections, including the right to one free credit report from each nationwide bureau every 12 months. Free access to credit scores is not guaranteed by these laws; scores may require payment or be provided through third parties (banks, credit-monitoring services, etc.).
* Disputes: If you find an error, you can file a dispute with the bureau that issued the report and with the information furnisher (e.g., the lender). The bureau must investigate and correct confirmed inaccuracies.

Practical tips
* Check reports annually: Request your free annual report from each major bureau (stagger them through the year if you want more frequent checks).
* Monitor for identity theft: Look for unfamiliar accounts, hard inquiries you didn’t authorize, or incorrect personal information.
* Improve your score: Pay bills on time, reduce outstanding balances, avoid opening unnecessary accounts, and maintain a mix of credit responsibly.
* Understand differences: If lenders pull reports from different bureaus, they may see different information and scores—consider checking all three bureaus if you’re planning major credit decisions.

Conclusion
A credit bureau’s role is to collect and present credit information so lenders can evaluate risk. Knowing how reports and scores are generated, how the major bureaus differ, and what protections and remedies you have can help you manage credit effectively and correct errors that could harm your financial standing.