Credit Bureau

Definition - What does Credit Bureau mean?

A credit bureau is a private agency that collects credit information about individuals for economic reasons. Because the information that credit bureaus gather is considered important for lenders such as banks, lenders are willing to pay creditors for this information. Essentially, credit bureaus engage in the collection and sale of credit information as a method of business.

In the context of the law, loans are legally binding and often represent significant amounts of money. This is why lenders use credit bureaus to help them identify qualified loan candidates. However, because credit bureaus use proprietary systems to determine credit scores, the amount of power they hold over people's lives has been a source of controversy. Their conduct is governed by law under the Fair Credit Reporting Act.

In the United States, a credit bureau is most commonly called a "consumer reporting agency."

Justipedia explains Credit Bureau

In the United Sates, credit bureaus, or credit reporting agencies, must maintain procedures to ensure that their scores are accurate, provide consumers with information about their scores and remove negative information within seven years' time. If consumers' rights under the Fair Credit Reporting Act are violated, they are eligible to recover damages, attorney's fees, court costs and even punitive damages if a reporting agency or another entity using the credit information willfully violates the law.

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