Credit Bureau
What is a credit bureau?
A credit bureau tracks the credit history of borrowers to create credit reports and credit scores. Financial companies buy this data to assist them with deciding the credit risk of their customers and arrive at conclusions about broadening them credit. The main U.S. credit bureaus incorporate Fair Isaac Corp. (FICO), Equifax, Experian, and TransUnion.
More profound definition
Credit bureaus research the credit history and behavior of borrowers. They collect both credit-related and non-credit data from financial institutions, banks, credit card companies, and even utilities and telephone companies. The data collected include:
- Repayment history.
- Amount of credit accessible and being used, which is called utilization.
- Length of credit history.
- Types of credit accounts.
- Number of credit requests.
- Records of bankruptcy, abandonments, tax liens, or repossessions.
- Outstanding obligations in collection.
Credit bureaus likewise collect essential realities about expected creditors, like address, employment history, and salary history. Be that as it may, this data doesn't factor into credit scores.
Banks, credit card companies, and different lenders use data accumulated from credit bureaus to decide the creditworthiness of their customers and to choose which products to offer them. For instance, a credit card company might offer a balance transfer credit card to somebody who conveys high credit card balances.
Borrowers are qualified for view their credit reports from every one of the significant credit bureaus once at regular intervals free of charge. They must pay to access their credit history and credit score data all the more consistently. There are many fee-based services that will keep tabs on credit history and credit score advancements.
Likely employers, landowners, insurance companies and a large group of different agencies use data assembled by credit bureaus to assist decide whether they need to conduct business with an individual.
Data reflected in a credit report from various bureaus can fluctuate marginally. A few accounts listed by one bureau might be missing completely from another. It likewise is feasible for the reports to be mistaken. Consumers reserve a privilege to dispute any data that shows up on a credit report. Financial specialists suggest checking the data accumulated by the credit bureaus consistently.
Credit bureau model
Fair Issac Corp. keeps up with FICO credit scores, while VantageScore Solutions, a joint venture between TransUnion, Experian, and Equifax, keeps up with VantageScore credit scores. Both scoring methods range from fantastic to exceptionally poor:
- Excellent: FICO = 800-850; VantageScore = 750-850
- Very good: FICO = 740-799
- Good: FICO = 670-739; VantageScore = 700-749
- Fair: FICO = 580-669; VantageScore = 650-699
- Poor: VantageScore = 550-649
- Very poor: FICO = 300-579; VantageScore = 300-549
Features
- The main three credit bureaus in the U.S. are Experian, Equifax, and TransUnion, in spite of the fact that there are several others too.
- A credit bureau collects and researches individual credit data and offers it to creditors for a fee, so they can come to conclusions about conceding loans.
- Credit bureaus assign credit scores to individuals based on the credit history that they collect.
- Credit bureaus don't conclude whether you will get credit — they only collect and integrate data with respect to your credit risk and give it to lending institutions.
- Credit scores are important indicators of whether you will fit the bill for credit and based on what conditions.
