We live in the age of data. The biggest tech companies are awash in data that defines each one of us: what we do online, where we go, what we buy, and even who our closest friends are. There is one kind of data that we typically don’t think about but can play a huge role in what we can do in life: credit bureaus. TransUnion, Experian, or Equifax are typically referred to as the “big three” credit bureaus. But what exactly are these agencies, and what defines them as a credit bureau?


A credit bureau is more accurately known as a “consumer reporting agency” and specializes in credit information.  There is a long legal definition for a consumer reporting agency, but in layman’s terms, it gathers financial information on a consumer and furnishes a report to third parties, like banks, lenders, and credit card companies. For example, when you apply for a loan or a credit card, your prospective lender will request a report from one or more of these agencies. The lender uses that credit report(s) to determine whether to extend a loan and how to set the terms of the loan if they do.


There are more reporting agencies than the big three. In fact, there are nearly fifty consumer reporting agencies that handle a range of reporting services with some providing comprehensive credit history like the big three, but others providing specialty reporting Some employers even use consumer reporting agencies for employment background checks while insurance companies may use them to determine whether to extend coverage.


The core purpose of all consumer reporting agencies   is the same: to provide consumer information to third parties.  Third-party companies use this information to perform an assessment of risk, which often comes in the form of a risk score.  The most common types of risk scores are credit scores, with the most widely used being FICO and VantageScore.


Thanks to regulation crafted by the Federal Trade Commission, consumer reporting agencies are required to give you a copy of the information in your report if you request it. Also, the big 3 credit bureaus are required to provide one free credit report each year, which is available at annualcreditreport.com. Regardless of how you access this information, it’s recommended that you get a copy of your credit report at least once a year. 


There’s a lot of data out there on each one of us, but it’s important to be familiar with what’s on your credit reports.  The results in your credit reports can determine if you land that next job, get approved for an apartment, or get a decent rate on your mortgage. The information can be powerful, but it shouldn’t be a black box. You have the right to see what is in your credit reports and should use that right regularly.


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