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A Quickie Guide to Understanding what a Credit Bureau DoesA credit bureau is a company that keeps credit history information about consumers. When you buy something, it could be anything; you may use some sort of credit. Whether its a credit card, in store credit, a cell phone company, a bank, or a credit union, they all report your credit information back to a credit bureau.
The credit bureau takes the information theyre given and puts together a whole file about your credit history. Every consumer that uses some sort of credit has a file and when you apply for credit with a bank, Credit Card Company, a home loan, or anything else of that nature, the creditor will pull up your credit report to see your credit history.
After the credit bureau has your file all put together they sell it. Whoever has a legitimate reason to view your credit history, can pay a fee and get a copy of your credit report.
There are a lot of
credit bureaus out there. Local and regional credit bureaus throughout the United States total over 1000. But each of these smaller credit bureaus are owned by or contracted with one of the three major credit-reporting agencies.
Equifax, Experian, and TransUnion are the three largest credit-reporting agencies. Each of them together keeps credit information for more than 170 million Americans. The information in the credit reports do not rate the consumers credit in any way. The credit bureau simply takes all the information theyre given and compiles it together for prospective creditors to view.
In your credit report, there is a lot of information for prospective creditors to view. The credit bureaus break down the information into four different categories. The first category is your identifying information. This includes your: name, current and previous addresses, phone number, social security number, current and previous employers, and date of birth.
The next category is your credit history. In this section prospective creditors will be able to see your history of bill paying with different creditors including: retail stores, mortgage companies, banks, and finance companies.
The third category is the public records area. Here information that is reported includes: tax liens, court judgments, and bankruptcies.
The last category thats reported on your credit report is the inquiries. This area contains a list of people that have received your credit report. These people or companies can include: employers, banks, rental agencies, mortgage companies, retail stores, or anyone else that accessed your credit report. Included in this section are also names and addresses of other companies that have received your contact information in order to offer you credit. These companies did not receive your credit information though, only your name and address.
Dont worry--its not just anybody that can access your credit report. The credit bureaus can only release your information to certain businesses or individuals that have permissible purpose.
As mentioned earlier, the Fair Credit Reporting Act has rules that the credit bureaus have to follow in order to ensure the rights of the consumers. Under this act permissible purpose is only granted to someone that needs to look at your credit report for insurance purposes, credit purposes, a business transaction that the consumer requested, and for determining eligibility for some kind of government benefits. If somebody does get a copy of your credit report illegally they can be punished by serving up to a year in jail.
Employers can also access your credit report with your written permission. Its not the same version of your report that prospective creditors will see though. The version that employers see is not as detailed as the other because they use it for different reasons and your account numbers are taken out for your protection.
As you can see its not the credit bureau that gives you good or bad credit. Your credit score is really up to you. When you start building up credit you need to be responsible and have control over your spending. When you do this, your creditors will have good reports to give to the credit bureaus and they can put these good reports into your file.
If youve made some mistakes in the past, its okay. There are ways that you can repair your credit. Youll have to do some work and contact the credit bureaus and your creditors as well. Its definitely attainable though and its not difficult to do.
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