A United States (U.S.) credit bureau, or a United Kingdom (U.K.) credit
reference agency is a company that collects information from various sources and
provides consumer credit information on individual consumers for a variety of
In the United States, the legal term for a credit bureau under the federal Fair
Credit Reporting Act (FCRA) is Consumer Reporting Agency (CRA). These
organizations are for-profit businesses and possess no government affiliation.
Though they are competitors, they have formed a trade organization called the
Consumer Data Industry Association (CDIA). This associations primary
responsibility is to establish reporting standards and to lobby on the behalf of
consumer issues in Washington, D.C.
Most United States consumer credit information is collected and kept by four
national credit reporting agencies: Experian (which purchased the files and
other assets of TRW), Equifax, TransUnion, and Innovis (which was purchased from
First Data Corporation in 1999 by CBC Companies).
Financial data and alternative data on individuals is obtained from a variety of
sources called data furnishers with which the bureaus have a relationship. Data
furnishers are typically creditors, lenders, utilities, debt collection agencies
and the courts (i.e. public records) that a consumer has had a relationship or
experience data provided by the furnishers as well as collected by the bureaus
is then aggregated into the credit bureau's data repository or files.
The resulting information is made available on request to customers of the
credit bureau for the purpose of credit risk assessment. These assessments
include credit scoring, the ability to pay back a loan, interest rates, terms of
a loan, etc., and these things help lenders access ones overall credit
worthiness. The information can also be used for other purposes such as leasing
an apartment and employment consideration.
Given the large number of consumer borrowers, credit scores tend to be
determined mechanically. To simplify the analytical process for their customers,
the different credit bureaus apply a mathematical algorithm. Based upon the
frequency that other individuals in similar situations have defaulted, this
formula can be used to provide a score that will rapidly access the likelihood
that an individual will repay a given debt.
Credit scores and interest rates determine risk-based pricing, which is a form
of price discrimination. Borrowers with anticipated risks as set out in
their credit rating, (i.e. with poor credit repayment histories or court
adjudicated debt obligations such as tax liens or bankruptcies) will pay a
higher annual interest rate than consumers who don't have these factors.
Credit bureau consumer protections and general rules governing guidelines for
both the credit bureaus and data furnishers are the federal Fair Credit
Reporting Act (FCRA), Fair and Accurate Credit Transactions Act (FACTA), Fair
Credit Billing Act (FCBA), and Regulation B.
Two government bodies share responsibility for the oversight of credit bureaus
and those that furnish data to them. The Federal Trade Commission (FTC) oversees
the consumer credit bureaus. The Office of the Comptroller of the Currency (OCC)
charters, regulates, and supervises all national banks with regard to the data
they furnish credit bureaus.