Credit bureaus play a key role in a lender’s decision to give you credit. Credit bureaus provide information about your credit profiles to credit providers. Credit providers use this information as part of their decision process. This information combined with their business rules and your affordability are what determine whether your loan is approved or declined.
A credit bureau gathers and stores your financial information, updates your credit history, and complies your credit profile into a credit report. A credit report is a document that outlines all your credit information showing how you manage and repay the credit given to you.
Credit bureaus have a three-tiered role:
- They give credit providers up to date information so that they can make an informed decision about lending you money.
- They reduce the risk for the credit provider because having your credit report means they can accept or decline your application based on whether you can afford to honour your commitment.
- They protect you, the consumer, against borrowing money that you cannot afford to borrow, by having credit providers lend you money responsibly.
Let’s clear up some common misunderstandings and ideas that people have about credit bureaus:
- Credit bureaus decline credit applications. False. Credit bureaus provide your credit report to credit providers who decide whether they will approve your loan based on your affordability assessment, credit report and various other business rules.
- Government owns credit bureaus. False. Most credit bureaus are privately owned and run, but must register with the National Credit Regulator who reports to the Department of Trade and Industry.
- I cannot contact a credit bureau directly. False. You can contact any credit bureau and request a copy of your free credit report once a year via their call centre or website. You can also ask for extra copies at a cost, and query or dispute any information on your credit report by contacting the bureau and following their dispute process.
As a leading credit bureau, Compuscan upholds the regulations set by the NCR, and manages your data responsibly and accurately, always ready to correct errors or out of date information. Check your free credit profile today to get informed about what your credit health looks like by clicking here.