What is a Credit Bureau?

A credit bureau is a company that gathers, maintains, and provides information to mortgage lenders about a home buyer’s credit history.

A Longer Definition: Credit Bureau

Credit bureaus, also called credit reporting agencies, collect and report on financial data from many sources, including banks, credit card companies, collection agencies, and government records.

Credit bureau data includes information from prior and current student loans, personal loans, and other loans; credit card usage and habits; payment history to creditors; and instances of bankruptcies or other derogatory outcomes.

A credit bureau compiles this information into credit reports, which lenders use to evaluate a home buyer’s mortgage application and creditworthiness. Credit bureaus are responsible for maintaining accurate credit histories but do not make lending decisions.

Credit Bureau: A Real World Example

When a first-time home buyer gets pre-approved, the lender requests a credit report from one or more credit bureaus. But, because each credit bureau collects data differently and independently, the home buyer’s credit scores and reports will vary somewhat.

Mortgage lenders don’t expect credit bureaus to report identical data. So, as part of their mortgage pre-approval sequence, lenders combine credit reports from multiple bureaus into dual-merge or tri-merge reports, which are two credit reports and three credit reports combined, respectively.

The merged credit reports broadly show how a home buyer utilizes credit, balances bills, and manages spending, which helps the mortgage lender make a decision about the first-time buyer’s application.

Common Questions About Credit Bureau

What are the major credit bureaus?

The three main credit bureaus in the United States are Equifax, Experian, and TransUnion.

How can I get a free credit report?

You are entitled to a free annual credit report from each of the three major bureaus through AnnualCreditReport.com.

How do I fix errors on my credit report?

You can file a dispute with the credit bureau. Credit bureaus are legally required to investigate and correct any verified errors, including medical debt, judgments, and more.

Do credit bureaus decide credit scores?

No, credit bureaus compile credit reports. Credit scores are calculated by different entities based on the information in these reports.

How do credit bureaus obtain my financial information?

Credit bureaus get financial data from your past and current credit activities reported to them by lenders and creditors.