What is a Credit Bureau?
A credit bureau is a company, registered by the National Credit Regulator, that has the right to both store and selectively sell your credit data. A credit bureau collects and researches individual credit information and sells it for a fee to creditors or other companies, so they can make a decision on whether to grant you credit, rent you a house or even whether to give you a job or not.
Credit bureaus broadly make their money in three ways:
- They sell your credit data in a raw format to banks, lenders, landlords etc who then use that data to make their own decisions.
- They sell analytical products (like a credit score) as well as various platforms to enable businesses to make better decisions.
- They sell your contact data to companies for the purposes of marketing products directly to you.
It’s important to point out that credit bureaus are highly regulated, and need to comply to strict data protection laws, else they could lose their license.
Also, while credit bureaus provide the data to banks and lenders for them to do their decision making, it is not actually the credit bureaus who are making the decisions. Really, they are like middlemen allowing data to flow freely, while also allowing the data to remain protected.
Finally, credit bureaus are committed to only storing accurate information. So, if you see something inaccurate on a credit report, you are entitled to take that up with the credit bureau and they will follow certain procedures (that may involve paperwork and time unfortunately) to resolve the data issues raised.
In short, credit bureaus are ultimately providing critical services to enable consumers to access credit in a quick and efficient way.