The credit bureau

When applying for a credit, all „candidates” are evaluated by the creditor institution, in order for being categorized as trustworthy or not, and their behavior as debtors to be predicted. The banks and other financial institutions use for evaluating the applicants some systems based on credit reports and on credit scores, because these are the standard evaluation tools. Usually, these credit reports are made on the base of information collected about consumers. These companies which collect this type of information (credit history and financial history) are called credit bureaus. A credit bureau is the main credit report provider in most of the countries. The credit bureaus are organizations which provide information on individuals’ borrowing and payment habits.

Knowing all this information about consumers helps lenders to check credit worthiness and the ability to pay back a loan. This information can affect the interest rate and other attributes of a loan. Interest rates are not the same for every credit applicant, but they can be based on risk factors. This method is sometimes called price discrimination, but it only offers some benefits to those who are creditworthy and brings the past back, in case of those who cannot follow a payment plan. Usually, consumers with good credit payment histories, with clean credit reports and high credit scores will pay a lower interest rate than those who don’t have these factors.

In the United States of America, there are 3 major credit bureaus. They collect and collate personal information and financial data from a wide range of sources, which are called data furnishers and which have a direct relationship with the credit bureaus. These data furnishers usually are the creditors, lenders and collection agencies that a consumer had a relationship with. These companies and agencies report the payment experience with the consumer and the credit bureaus centralize this information in papers called credit reports. Credit scores are the standardized comparison method between the credit applicants. The number of credit applicants is continuously growing, and due to this fact, the credit scores are mechanistic calculated. There are special algorithms which quantify the information in the credit reports and sums up all the variable’s values.

The credit bureau

All the citizens are entitled to three free annual credit reports, one from each of the 3 major credit bureaus: Experian, Equifax and TransUnion. The consumers can access annualcreditreport.com, a website maintained by the three credit bureaus, and make a request for their credit report.

Experian has its origins in an information services business founded in 1980 by GUS, another company. GUS had had an internal department which provided credit checking and marketing information about the customers to the other GUS departments. CCN, this small business inside the GUS business had developed databases, systems, algorithms and skills to support a wide range of consumers, and in short time it had become the leading credit bureau in UK. (GUS had the headquarters in Dublin, Ireland). The expansion on the US market came in 1986, when CCN purchased Management Decision Systems (MDS), a provider of decisional and analytical force for the financial industry. After MDS acquisition, CCN transformed into CCN Decision Analytics and expanded on the Canadian and Australian markets. Today, Experian employs almost 16,000 people in 38 countries, and supports clients in more than 65 countries.

The second credit bureau in United States of America is Equifax. It was founded in 1899, as Retail Credit Company and it grew quickly, because in 1920 it had had offices throughout both Canada and US. By the 1960’s, this company was the largest credit bureau in US, which had record of millions of American, and also Canadian citizens. In the 1960’s and 1970’s the company had a strong willingness to sell the information they held to everyone, but they attracted criticism. The company, in the same period was alleged to reward the employees for negative information about consumers. Equifax sells credit reports, analytics, statistics, demographic data and software applications for processing this kind of information. Equifax is nowadays one of the three large credit bureaus which provide lenders and creditors of any kind the credit reports and the scores they need for evaluating the loan applicants.

The credit bureau

TransUnion is the third largest credit reporting agency in the U.S. This company, like the other two credit bureaus, offers credit information to creditors and markets the credit reports to consumers. TransUnion was created by Union Tank Car Company in 1968 and the credit business began in 1969, when Credit bureau of Cook County was purchased by Union Tank Car. Today, TransUnion operates 250 offices in the United States of America and in other 24 countries. This company is based in Illinois, Chicago. Until January 2005 it was a Marmon Group subsidiary, but since that year it is an independent, private company.

These are the three credit bureaus which provide within the United States credit reports and credit scores for individuals, but there are also commercial credit reports and scoring systems. Two examples of this kind of evaluation tools are Paydex score from Dun and BradStreet and the Experian Intelliscore.

The legal term which nominates a credit bureau, in the United States, is consumer reporting agency. This term is usually abbreviated as CRA the legal framework is created by the Fair Credit Reporting Act (FCRA), the Fair Credit Billing Act (FCBA), Fair and Accurate Credit Transactions Act (FACTA) and Regulation B. There are two governmental bodies which have the responsibility to oversight the credit bureaus in the U.S and those who furnish data. As I have mentioned before, there are 3 major credit bureaus. If you would like to contact credit bureau a credit bureau, you should check out their websites, and you can find online the contact credit bureau information for each of the existing credit bureaus. Here are the phone numbers for the 3 major credit bureaus in U.S., but you should check their websites for any changes which may occur any time:

Experian credit bureau phone number: 1 888 397 3742

Equifax credit bureau phone number: 1-800-685-1111

TransUnion credit bureau phone number: (800) 888-4213

In order to contact the credit bureaus by e-mail or online, you can access their websites and complete the available forms. As soon as possible, depending on your request, a customer services employee will contact you and he will help you solve the problem. Feel free to request a credit report from these credit bureaus, because it is your right to be informed!