What Service Does a Credit Bureau Perform?


While we may not like the idea of a credit bureau with financial files maintained on our financial dealings, they are necessary for business.  Since the turn of the century, a credit rating system has existed in some manner or another, maintained by a local bureau. 



In modern times the bureau has gone multinational and is completely electronic, monitoring our financial movements and assessing our credit worthiness.  A credit bureau works not for us the consumer, but for the lending institutions it supplies data to.  They operate by creating records of individuals and businesses regarding their financial dealings. 


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The files include but are not limited to: 


- Complete name and known physical addresses 
- Employers  
- Accounts open with creditors and their payment history, i.e. on-time payments, late payments, and missed payments. 
- Delinquent or collection accounts against the individual or business by creditors. 
- Requests for information from the file itself, known as inquiries 


These elements to our financial dealings in conjunction with our income amounts, is what creditors use to determine our credit worthiness; whether or not we are a safe bet for a loan.  While these credit reports and the credit bureau which maintains them may cause us grief from time to time, they actually help us.  Without a properly maintained credit rating system from a credit bureau, the fact is, our interest rates would be tremendously high. 


credit rating score


The banks and lending institutions would have no way to negate financial loss by deciding against potentially bad loan risks, meaning we all would have to pay for their losses.  With no credit rating system in place, everybody would be forced to pay the same interest rate, and a much higher one at that.  If you don’t believe it, look at what people are paying for loans in Central America, on average 20% or more.  This is because they lack a system.  Meaning banks suffer tremendous losses to bad borrowers and the good borrowers pick up the tab. 


Is a Credit Bureau Regulated?


credit bureauEvery credit bureau in operation in the United States is regulated by the Fair Credit and Reporting Act of 1970 (FCRA).  Additionally many states have additional laws and statutes which further protect the consumer from any bad behavior on behalf of the credit bureaus.  Some of the rights guaranteed under the FCRA are the following: 


- The consumer is to be given notice by the bureau about their credit reporting activities 
- The consumer is granted access to the information contained in the their report 
- The right for the consumer to correct erroneously reported information
- The right to know which credit bureau was involved in adverse action resulting from a credit report and their contact name and address.   
- The right to a free report from the bureau once annually and once again after any adverse reaction resulting from a report 


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Contacting the Credit Bureau Yourself 


If you wish to contact the credit bureau holding your credit report information for any reason, it has never been simpler.  You may contact them via mail, telephone, or even through their website.  Below is the contact information for the three major credit bureaus: 


credit bureauEquifax 

P.O. Box 740241 
Atlanta, GA 30374 




P.O. Box 2002 
Allen, TX 75013 
1 888 397 3742



P.O. Box 1000 
Chester, PA 19022 

Who Reports Information to the Bureau? 


While every company chooses whom they prefer to contract with for their credit reporting needs, they all choose one of the major three credit bureaus listed above.  Lending institutions are not required by law to perform credit checks or use these companies when looking at a potential lender, they choose to.  They know with the information provided from their bureau of choice they are making a much more informed loan or credit line decision.  Scientific studies have shown time and time again that this system, while not perfect, works.  If you have a low credit risk rating, meaning a high credit score, you are more likely to pay off a loan or credit card.  It works just the same when looking at poor credit histories and their likeliness to default on loans.  Statistically speaking, they do.