What Is The New Or Alternative Credit Bureau?

There are no new credit bureau or alternative credit reporting bureaus in the United States. Lenders and other businesses that rely on the extension of credit to consumers use the 3 major credit bureaus for consumer credit information. These bureaus are Experian, TransUnion and Equifax.  

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) of 1970 was a law that was enacted in the United States.  It regulates the collection, distribution and use of consumer credit information. The FCRA provides consumers with protection against abuse or fraudulent use of personal credit information.  The law is administered by the Federal Trade Commission.

Under the FCRA, credit bureaus known as credit reporting agencies (CRAs) such as the 3 major bureaus previously mentioned, have certain responsibilities to the consumer when providing credit information to a requesting organization. Information concerning consumer credit is provided by businesses that extend credit to individuals. Information that is false or incorrect must be removed upon proof and verification by an individual.

FICO and VantageScore

Credit is traditionally measured using the Fair Isaacs Corporation (FICO) score. This score, which ranges between 300 and 850, indicate the creditworthiness of an individual. The lower the credit score, the harder it is for an individual to obtain additional lines of credit or qualify at all.

The VantageScore is the first attempt by the CRAs to combine their reporting methodologies into a uniform standard. This collaboration makes it easier for businesses to read and determine the creditworthiness of the individual without having to manually review the information. The VantageScore ranges from 501 to 990 and higher scores are indicative of better credit risk.

3 Major CRAs

The 3 major CRAs have been operating for many years as keepers of consumer credit information. Their maintenance of this information is in keeping with the provisions of the FCRA. The CRAs are required to provide 1 free credit report annually to a consumer upon request. This allows the consumer the opportunity to verify the information provided in their credit report and make adjustments as needed.

Again, there are no new CRAs or alternatives to the current system.  A discussion of the history and role of the 3 major agencies may be useful.

Experian

Experian is a global credit information business that is based in Dublin, Ireland.  It acquired the U.S. company TRW Information Services in 1996, which was a CRA under the FCRA. Experian maintains a database of information concerning consumer credit for 215 million people living in the United States. Experian North America, which is the company’s U.S. CRA, is one of the largest credit reporting bureau in the United States.

TransUnion

TransUnion is an independent, privately owned CRA that has been in business since 1968.  It is the 3rd largest of the 3 major credit bureau agencies. TransUnion makes its consumer credit reports available directly to consumers. The company is based in Chicago, Illinois.

Equifax

Equifax is the largest of the 3 major credit reporting agencies. The company maintains credit information on over 400 million people worldwide. It was founded in 1899, making it the oldest credit reporting bureau, which is still in operation today. The company is based in Atlanta, Georgia.

 



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