Credit Bureaus in Today’s Credit Markets. ECRI Research Report No. 4, 1 September 2002

Riestra, Amparo San Jose. (2002) Credit Bureaus in Today’s Credit Markets. ECRI Research Report No. 4, 1 September 2002. UNSPECIFIED.

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Abstract

[From the Introduction]In all EU countries today, lenders can access information in databases to help them assess the creditworthiness of a credit applicant. The establishments that compile these databases are known as credit bureaus, credit registries or credit reporting agencies. Credit bureaus gather information on the payment history of borrowers and issue credit reports prior to the underwriting of a loan, whether for the purpose of buying a house, a car, opening a credit line or simply subscribing to a mobile telephone service. In the United States, data from credit bureaus on consumer borrowing, payment behaviour and other aspects of household finances have become the cornerstone of underwriting decisions on consumer loans. Credit bureaus in the United States collect and store comprehensive data for over 200 million adult residents. More than 2 million credit reports are sold by credit bureaus every day. It is widely accepted that the development of the credit bureau industry has played an essential role in the expansion of the North American credit market. The type and quantity of data available and the mechanisms by which this information is shared vary greatly across EU countries. Lenders often provide information to credit bureaus voluntarily, although in some cases, the authorities impose this disclosure via public registers. The data collected can vary over time and between countries and usually consist of past instances of default or payments having fallen in arrears (known as ‘negative’ information). The data can also be of a ‘positive’ nature, however, to include a customer’s outstanding liabilities, maturities and other details about his or her credit history.

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