UNDERSTANDING THE NATURE OF A CREDIT BUREAU.Mar 262020
A credit bureau also known as a credit reporting agency is an entity which collects, maintains or otherwise processes credit information based on your credit accounts and reflects your credit history and payment patterns into the form of a credit report or credit score. This report or score is in turn distributed to your potential lenders and you. Thus, the main aspect of a credit bureau service is the gathering and the distribution of information relating to your financial performance and service of debts.
The credit information being collected from your creditors may include the amount of any loans, credit transactions or any other facilities granted to you, the payment history, the amounts due to be paid, the balances, the date for the last payment and the amounts. This credit information is attached to your credit profile which will also include basic identification information such as your name, an unique identifier like the national identification number to adequately identify each individual consumers and contact details. By combining such information, a credit report or score is generated to efficiently aid with the lending decision.
Credit reporting benefits both lenders and consumers. It can help increase your access to credit as it provides lenders and creditors with reliable information to determine your creditworthiness and serves as a guide to determine whether credit should be extended and, if so, under what terms.
Therefore, a credit bureau serves as an integral aspect of a finance industry and economy as it facilitates greater access to financial services by consumers. In earlier times, lending practices were based on the banking relationship and familiarity with the consumer and further premised on the provision of security. However, with the presence of a credit reporting system, lending institutions can extend credit base on the information available on the credit report, effectively pre-screen the risks, if any, that may be involved in extending credit. With the risks or lack thereof identified or the uncertainty pertaining to a new applicant erased by a review of their credit report, there can be more flexibility in lending practices and the terms imposed for the extension of credit. There may be no need for security or collateral in order to secure repayment. Where there is an increase in a consumer’s ability to borrow money, there is usually a corresponding increase in economic growth.
Therefore, as our slogan indicates Make Credit Work for You! Do not hesitate to contact us to find out how you can obtain your credit report