Credit Bureaus: Gatekeepers to
Your Credit Report
Credit Reports go all the way back to 1860, but formal credit bureaus as they exist today are a more modern phenomenon. Simply put, credit bureaus are warehouses for any and all consumer credit information. They amass millions of pieces of data on borrowers, then share this information with creditors, potential lenders and others. They do this by organizing the data into a concise credit report summary, and then assign a point value to the creditworthiness of each consumer (the credit score). Lenders use the content of the report and the credit score to decide if they will do business with a particular individual -- and how much they're going to charge for the privilege. This is called risk-based pricing, and it's the reason one person gets 0% financing, another pays 25% interest, and still another is turned down completely when attempting to secure the same item (car, home, credit card, etc.).
There are three primary consumer credit bureaus, also known as credit reporting agencies: Experian, Equifax and TransUnion. Creditors provide information to one, two or all three of the agencies about their consumer accounts. This includes loan and credit card information, documenting how long you've had accounts, balances, credit limits, and your payment history. Your vitals (name, birth date, social security number, etc.) are also included in the report. Additionally, the bureaus maintain "public record" data such as bankruptcies, liens and judgments; and information on any delinquent accounts that have gone to collections. Last, they keep a list of "inquiries" made by current and potential creditors considering doing business with you.
Because lenders report information on a voluntary basis, your account data may or may not appear in all three of your credit reports (and might not appear in any). And, because of the inconsistency of available data, credit scores may vary wildly from bureau to bureau.
In addition to the three credit reporting agencies, another important credit bureau is called Choicepoint. They provide information to insurance carriers. If you've ever had an auto or homeowner claim (or policy for that matter), you're in Choicepoint's files. They use a Comprehensive Loss Underwriting Exchange (CLUE) Report to develop a consumer profile and create a "CP-ATTRACT" Score. It functions much the same way your credit score does -- it gives insurers a barometer by which to measure your risk of filing claims in the future.
Together, these credit bureaus know almost everything about you. While legislation, such as the Fair Credit Reporting Act, attempts to monitor the monitors, you should remain vigilant about what is on your credit reports. Know who has information on you. Know what they are saying about you. Take steps to ensure creditors and credit bureaus accurately assess your credit-worthiness.