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A credit bureau tacks and keeps a record of credit history and other financial information of an individual and determines the credit rating of an individual. Such credit ratings are useful to the lenders while lending their money to an individual. The lenders check the ratings and determine the risk in granting the loan. The higher the credit rating, the lower the risk and vice- versa.  In addition, a low credit rating results in a higher rate of interest on a loan.

In the world of credit ratings, three credit bureaus are famous, namely Equifax, Experian and Trans union. These three credit bureaus maintain data regarding the credit rating of an individual and constantly share information with each other.  Whenever an individual applies for a loan, the lender checks the credit report and score provided by these three credit bureaus. A credit bureau tracks an individual with the help of a social security number.

The three credit bureaus constantly update information provided by the creditors. Such information includes particulars about the date on which the account was opened, the credit limit sanctioned, the current outstanding balance and any default in the repayment of the loan. In addition to this, if the individual has closed the account after paying off all the dues, the report will show the details for a period of seven to eleven years.

The three credit bureaus also reply to any query made into a person’s credit history. The report   contains the particulars of a person making the enquiry and the particulars of the query. However, the higher number of hard credit queries negatively affects the credit rating of an individual.

The reports prepared by these credit bureaus are considered as public documents and helps the lenders a great deal in determining the reliability of an individual. For instance, creditors will be hesitant in granting a loan to a person who has been declared bankrupt in the past as compared to a person with a clean credit report.

People have different views regarding the credit bureaus. While those with a poor credit rating consider it to be hurtful, those with a good credit record greatly benefit from it. The credit rating agency grants an opportunity of being heard to an individual before adding a potentially negative item to their credit report. Moreover, in some states the credit bureaus are required to give a copy of the annual credit report to an individual, which in turn allows individuals to keep his or her credit record under check.