Credit Bureaus

Reproduced from www.experian.com*

How does a credit bureau help me?
If you're like most consumers in the United States, your ability to own a home, purchase a car, fund a college education, travel and make routine purchases hinges on your responsible use of credit. Because an automated credit reporting system works quietly in the background on your behalf, you have unlimited options in your financial life. For example, you can:

• Purchase a home in one area of the country based on the good credit record you established while living in another part of the country
• Shop for and be offered financial services from institutions in other regions of the country
• Pay for emergency medical treatment
• Negotiate a deal for a new car and drive it off the lot within a few hours
• Catch an airplane at the last minute

Credit reporting also helps foster intense competitive marketing battles among financial services providers. This competition provides you with:

• Lower interest rates
• Reduced annual fees
• Special toll-free customer service phone numbers
• Customer recognition programs
• Purchase protection plans, among other benefits

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Do credit bureaus decide whether I should get credit?
No. Only credit grantors make lending decisions.

A credit bureau's business is credit reporting. It collects information from credit grantors such as banks, savings and loans, credit unions, finance companies and retailers. It stores this information in a computer database, then provides it to credit grantors when you apply for a new credit card or loan.

Each credit grantor decides what standards you must meet to be granted credit. The credit bureau does not track the decision a credit grantor makes after ordering a credit report, favorable or not.

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*Reprinted with permission of Experian copyright 2001. For more information visit www.experian.com

Next: How Are Credit Decisions Made?