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.
Understanding Credit Bureaus
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.
Data collected by credit bureaus includes information about student loans, personal loans, and other loans; credit card usage and payment history; and records of bankruptcies or other negative financial outcomes.
Credit bureaus compile this data into credit reports, which lenders use to assess a home buyer's mortgage application and overall creditworthiness. Credit bureaus are responsible for maintaining accurate records but do not make lending decisions themselves.
How Credit Bureaus Work in Home Buying
When a first-time home buyer seeks pre-approval, the lender requests a credit report from one or more credit bureaus. However, because each bureau collects and reports data independently, the buyer's credit scores and reports can vary.
Mortgage lenders do not expect credit bureaus to provide identical data. As part of the pre-approval process, lenders often combine reports from two or three bureaus into dual-merge or tri-merge reports, respectively. This allows them to get a broader view of the buyer's credit usage and financial habits.
Merged credit reports show how a home buyer manages credit, pays bills, and handles spending, helping lenders make decisions regarding mortgage applications.
Common Questions About Credit Bureaus
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 credit 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 required by law to investigate and correct any verified errors, including inaccuracies related to medical debt, judgments, and more.
Do credit bureaus decide credit scores?
No, credit bureaus collect and compile credit reports. Credit scores are calculated by other entities based on the data provided in these reports.
How do credit bureaus obtain my financial information?
Credit bureaus receive financial data from lenders and creditors based on your past and current credit activities.
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