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Simple English definitions for legal terms
credit bureau
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A quick definition of credit bureau:
A credit bureau is a company that collects information about how responsible someone is with money. They gather this information from banks, credit card companies, and other places where people borrow money. The credit bureau then sells this information to other companies who want to know if someone is trustworthy enough to lend money to. There are three big credit bureaus in the United States. They keep track of things like how often someone pays their bills on time and if they have ever had trouble paying back money they borrowed. The government makes sure that credit bureaus follow rules to protect people's privacy and make sure the information they collect is accurate.
A more thorough explanation:
A credit bureau is a company that collects and sells information about a person's credit history to lenders, banks, and other financial institutions. This information helps these entities make decisions about whether or not to lend money to the person.
- Equifax, Experian, and TransUnion are the three major credit bureaus in the United States.
- Credit bureaus collect information about a person's payment history, account balances, debt collections, and bankruptcies.
For example, if someone applies for a loan, the lender may request a credit report from one or more of the credit bureaus to see if the person has a history of paying their debts on time. If the person has a good credit history, the lender may be more likely to approve the loan. On the other hand, if the person has a poor credit history, the lender may be less likely to approve the loan or may charge a higher interest rate to compensate for the increased risk.
credit | Credit Card Accountability Responsibility and Disclosure Act (2009)