Benefit Services

Definition of a Credit Bureau

A Credit Bureau is an independent organization that compiles public record data, statutory information, identity information, credit transactions and payment histories of individual consumers and organizations. By keeping track of both personal finances and business affairs of business owners, these institutions provide a valuable service to the financial sector.

The role of a Credit Bureau is to:

• Protect financial institutions against making bad lending decisions.

• Protect consumers by helping lenders and borrowers ration credit based on capabilities to pay

• Facilitate information sharing amongst lenders

• Bridge lenders and borrowers

• Facilitate the provision of credit without security by assisting evaluations of the ability to pay and payment diligence.

• Report information which positively or negatively affects creditworthiness

• Limit fraud

• It does not provide a credit decision for the Lenders.

A Credit Bureau allows lenders to:

• Know the applicant’s credit history – good or bad

• Be aware of known or suspected fraud concerned with the applicant

• Verify information supplied by the applicant

• Authenticate the applicant