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About Credit Bureaus
(Consumer Reporting Agencies)

A credit bureau (U.S.), or credit reference agency (UK) is a company that provides credit information on individual borrowers. This helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate applied to loans. Interest rates are not the same for everyone, but instead are based on risk-based pricing, a form of price discrimination based on the different expected costs of different borrowers, as set out in their credit rating.

Credit bureaus collect and collate personal financial data on individuals, from financial institutions with which they have a relationship. The data are aggregated and the resulting information is made available on request to contributing companies for the purposes of credit assessment and credit scoring. Given the large number of consumer borrowers, these credit scores tend to be mechanistic. In other words, the different credit bureaus collect data from a variety of sources and then apply a mathematical algorithm to assess the likelihood that an individual will repay a given debt given the frequency that other individuals in similar situations have defaulted. Given the mechanical nature of this calculation, an individual's credit score is highly dependent on other individuals' credit scores which could adversely affect their score. Consequently, most consumer advocates advise individuals to review their credit reports at least once per year in order to ensure that the reports are accurate.

Business Credit Reports and Scoring, which report the statistic likelihood of a business paying creditors, also exist, such as the Paydex Score from Dun and Bradstreet and the Experian Intelliscore.

United States

In the United States, the legal term for a credit bureau under the Federal Fair Credit Reporting Act (FCRA) is "Consumer Reporting Agency."

Most credit history information is collected and kept by the three national credit bureaus, Experian (which purchased the files and other assets of TRW), Equifax, and TransUnion. These organizations are for-profit entities and possess no governmental affiliation.

Innovis is another consumer reporting agency. Starting out as ACB Services in 1970 by Associated Credit Bureaus, in 1989 it was purchased and renamed Consumers Credit Associates (CCA) and began to gain commitments from major credit grantors to contribute data. In 1997, First Data Corporation (FDC) purchased CCA and renamed this division Innovis Data Solutions, Inc. In April of 1999, CBC Companies purchased Innovis Data Services from First Data Corporation.

PRBC (Pay Rent, Build Credit, Inc.) is a national alternative credit bureau. Incorporated in March of 2002. PRBC enables consumers to self-enroll and build a positive credit file by reporting their on-time payments (such as rent, utilities, cable, and phone) that are not automatically reported to the three traditional credit bureaus.

United Kingdom

In the United Kingdom, the three credit reference agencies are Experian, Equifax and Callcredit, which was established in 2001 and is now working closely in association with its American counterpart, TransUnion.

Most banks and other credit-granting organizations subscribe to one or more of these organizations to ensure the quality of their lending. This includes companies who sell goods or services on credit such as credit card issuers, utility companies and store card issuers. Subscribing organizations are expected to provide relevant data to maintain the common data pool.

Credit reference agencies are bound by the Data Protection Act, which requires that data relating to identifiable individuals must be accurate, relevant, held for a proper purpose and not out-of-date. Individuals have a legal right to access data held on them.

The activities of Credit Reference Agencies are governed under UK law by the Consumer Credit Act 1974.

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