Credit bureau?

CityPress - - Business -

WAndy writes:

hat in­for­ma­tion are banks able to buy from credit bu­reaus about my fi­nan­cial his­tory and stand­ing, and what do they use it for?

Tran­sUnion replies:

Lenders, such as banks, pur­chase a per­son’s credit files – which rep­re­sent that in­di­vid­ual’s cred­it­wor­thi­ness – when that per­son de­cides to ap­ply for credit. Thus, a len­der buys a per­son’s credit file from a credit bureau such as Tran­sUnion. The type of credit in­for­ma­tion found in th­ese files in­cludes:

Per­sonal in­for­ma­tion (iden­tity de­tails, ad­dress, con­tact num­bers).

Ex­ist­ing credit, such as home loans, car fi­nance, cloth­ing ac­counts, credit cards.

The pay­ment his­tory, which would in­di­cate whether or not you meet your monthly credit pay­ments.

Neg­a­tive list­ings – if you have any. Th­ese would in­clude de­faults, judg­ments and in­sol­vency.

En­quiries/credit ap­pli­ca­tions from com­pa­nies that have ac­cessed your credit re­port for ap­pli­ca­tion pur­poses.

The credit score, which is a nu­mer­i­cal value based on anal­y­sis of a per­son’s credit his­tory cal­cu­lated by a credit bureau such as Tran­sUnion. There are a num­ber of fac­tors that in­flu­ence your score, such as your in­come and ex­penses that you pro­vide when you ap­ply for that loan through your fi­nan­cial in­sti­tu­tion.

It’s im­por­tant to un­der­stand that there are many dif­fer­ent credit-scor­ing mod­els out there that are cre­ated by dif­fer­ent credit bu­reaus, and each may use a dif­fer­ent scale to con­vey in­for­ma­tion. It’s up to in­di­vid­ual lenders and in­sur­ance com­pa­nies that use th­ese scores to de­cide which scores demon­strate an ac­cept­able level of risk.

The lenders, such as banks and credit card com­pa­nies, use the credit bureau in­for­ma­tion listed above to eval­u­ate the po­ten­tial risk posed by lend­ing money to con­sumers and to mit­i­gate losses due to bad debt.

Be­cause the credit re­port shows the con­sumer’s be­hav­iour when it comes to pay­ing ex­ist­ing ac­counts, lenders use this in­for­ma­tion to as­sess how a con­sumer man­ages their debt/fi­nan­cial re­spon­si­bil­i­ties, and then make a de­ci­sion to ei­ther of­fer the credit or de­cline the re­quest. Can a poor credit record af­fect your chances of get­ting a job?

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