Credit Bureau

What Is Credit Bureau?

A credit bureau, also called a consumer credit reporting agency, is a company that collects and maintains information about how consumers use credit and compiles it into credit reports. In the United States the three major bureaus are Equifax, Experian, and TransUnion. They gather data reported by lenders, such as account balances, credit limits, and whether payments were made on time, and organize it into a file for each consumer. Scoring models like FICO then draw on this reported information to produce a credit score. By federal law, consumers can request a free copy of their credit report from each major bureau at least once a year, historically through AnnualCreditReport.com. Inquiries into a report are recorded and classified as either hard or soft depending on their purpose.

Why It Matters

Credit bureaus matter because they are the source of the data that scoring models and lenders rely on, so the accuracy of their files directly shapes the credit score a person receives and the terms they are offered. Because three separate bureaus each maintain their own file, the information they hold can differ, which is part of why consumers are entitled to review each report. The right to a free annual copy from every major bureau exists so people can check that the record is correct and complete. The distinction between a hard inquiry, made when applying for credit and able to affect a score, and a soft inquiry, such as checking one's own report, which does not, also traces back to how bureaus log access to a file.

Test Your Knowledge

Questions on this topic from the EconRecall fact bank:

• What are the three major U.S. consumer credit bureaus?
  Equifax, Experian, and TransUnion
• By federal law, how often can U.S. consumers request a free copy of their credit report from each major bureau?
  At least once per year (via AnnualCreditReport.com)