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Credit Bureaus
A credit bureau (U.S.), or credit reference agency (UK) is a company that provides credit information on individual borrowers. This information is called
credit report and it helps lenders assess applicant's credit worthiness so they can decide what credit terms and interest rates to offer.
Credit bureaus collect and collate personal financial data on individuals, from financial institutions with which they have a relationship. The data are aggregated and the resulting information is made available on request to contributing companies for the purposes of credit assessment and credit scoring. The different credit bureaus collect data from a variety of sources and then apply a mathematical algorithm to assess the likelihood that an individual will repay a given debt given the frequency that other individuals in similar situations have defaulted. If a credit bureau has collected inaccurate or misleading data, an individual's credit score could be adversely affected as a result. Consequently, most consumer welfare advocates advise individuals to review their credit reports at least once per year, in order to ensure that their credit history is accurately represented.
In the United States, the legal term for a credit bureau under the Federal Fair Credit Reporting Act (FCRA) is consumer reporting agency.
Most credit history information is collected and kept by the three national credit bureaus, Experian, Equifax, and TransUnion. These organizations are for-profit entities and possess no governmental affiliation.
In the United Kingdom, the three credit reference agencies are Experian, Equifax and Callcredit (a subsidiary of Trans Union). Credit reference agencies are bound by the Data Protection Act, which requires that data relating to identifiable individuals must be accurate, relevant, held for a proper purpose and not out-of-date.
[Source:
Wikipedia]
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