Wednesday, December 13

Your Money – Finance Column – US Credit Bureaus

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A credit bureau is a government agency or an independent administrative unit that helps in providing valuable inputs regarding a creditor’s or a consumer’s credit history. In US, credit bureaus prepare database of individual creditors using information collected from various sources.  This database contains personal information, financial transaction details, financial history of a particular creditor or borrower and is collected from previous lenders, banks, financial institutions, court and other public records.

Information thus collected and aggregated is stored into database and is made available on request.  This information is sought for preparing:

1. Contractor license credit report. This report provides personal or credit information required to obtain contractor’s license and meets all the guidelines required by nearly every state, city or county governmental agencies.

2. Consumer and commercial credit report: These reports help in extending credit, employment, rental agreements, collection and insurance. Credit report or credit history helps in arriving at a credit score

Due to large number of borrowers and the mechanical nature of credit scores, there is every possibility of oversight resulting in poor credit score and dispute.  It is also possible that the information collected may or may not be authentic.  In case of any dispute, the Federal Trade Commission (FTC) and Office of the Comptroller of the Currency (OCC) regulate and provide the necessary redressal mechanism to the aggrieved parties.  FTC helps credit bureaus and OTC helps in supervising data provided to credit bureaus by various sources viz, banks, financial institutions, etc.

In the United States, general rules and guidelines that govern credit bureaus and information providers are provided by the Federal Fair Credit Reporting Act (FCRA), Fair Credit Billing Act (FCBA), Fair and Accurate Credit Transactions Act (FACTA), and Regulation B.  In the United States, there are three major credit bureaus besides others who store collected credit and other related information.  They are Equifax, TransUnion and Experian.

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