Credit bureau
Mortgage Dictionary -> Credit bureau
What is credit bureau?
If you have ever applied for any jobs, credit card, loans or even a lease on an apartment then you have certainly come in contact with a credit bureau. You might have heard about them or might not have but they have a profound effect on your financial life.
What are a credit bureaus and how do they affect us?
In the United States there are 3 main companies called credit bureaus. These credit bureaus are known as Transunion, Equifax and Experien. The main job of these credit bureaus is to have a database of all your financial transactions involving loans, credit cards, mortgages, etc. They compile a list which is used by virtually every creditor in the country. More and more they are being used by potential employers, landlords, insurance companies, etc to make decisions about you.
The credit bureaus gather the information from various different creditors. Let's say you had a card with Chase Bank and you have been making payments on it on a regular basis. Chase Bank is updating the credit bureaus monthly about the status of your payment. If you a miss a payment (which means being 30 or more days late) then the credit bureaus get notified and a late payment is added to your account.
Credit bureaus collect many different kinds of information. They include your personal information such as your name, DOB, addresses associated with you, former and current employers as well as your social security number. The primary way a credit bureau collects information about you is through your social security number.
Your credit report also includes information about the type of account you have (such as Credit, Loan, etc), your creditor, amount owed, payment history, total limit, etc. Even if you close an account it will still show up on your credit report.
Another thing that the credit bureau does is that it will report the number of inquiries made by other creditors. For example, if you applied for a car loan then the inquiry will show up on your credit report. Too many inquiries usually end up hurting the person.
Credit bureaus also report public information about you such as bankruptcy, judgments, etc. Most of the negative information in your credit reports is stored for maximum of 7 years while bankruptcy can be there for 10 years. Due to a recent legislation, all the credit bureaus offer your entire credit report for free once a year which allows you to look over your report and find any negatives and dispute them.