Meet the credit bureau. Everyone’s helpful, informed friend you didn’t know you needed until you applied for your first bank loan.
You may wonder, exactly what is a credit bureau? If you’re exploring buying a car, applying for a loan or looking to add to your financial knowledge, it’s useful to understand more about the services and support offered by credit bureaus.
In this article, our credit experts explain how a credit bureau works and its role in your financial health. With a human touch, we also explore what kind of ‘friend’ a credit bureau would be if it were a person.
Backstory of the bureau
A credit bureau is, by definition, a company that collects and stores information about how you handle credit. These companies gather data on things like credit card use as well as loans and payment histories, and turn this into a report that credit providers can use to decide whether to lend you money.
But where did it all start? Looking back, credit bureaus have been around for a long time. In fact, they were started to help businesses decide who to lend money to and over time, their services grew. Today, there are a number of credit bureaus operating globally, not only helping credit providers assess borrowers worldwide—but assisting us all to better manage our finances.
The credit bureaus you’ll now find are large multinational companies that use advanced systems to track financial information—and as such, they work in many countries to support financial institutions in making informed lending decisions.
Here’s another fact, a first fact: The first credit bureau, founded in the mid-1800s in the United States as the Retail Credit Company, was established in 1899. It was created to provide businesses with data on whether customers could be trusted to repay debts. Now known as Equifax, it’s considered one of the “big three” global credit bureaus.
| CREDIT BUREAUS SERVING SOUTH AFRICANS TransUnion: A leading global credit bureau with a significant presence in South Africa, providing credit reports, fraud detection and other financial services. Experian: A well-established multinational that operates in South Africa, offering credit information, data analytics and supporting businesses with credit risk management. XDS: A key local credit bureau that specialises in credit information and reporting, serving both consumers and businesses in South Africa. Compuscan: A South African credit bureau that provides comprehensive credit reporting, risk management solutions and credit scoring to businesses and consumers. |
HOW CREDIT BUREAUS WORK AND HELP YOU:
They track your credit history, which can help you monitor your financial wellness.
Credit bureaus are in the business of pure and prolific data.
They collect and store detailed data about your financial history, including loans, credit card usage and payment records. This information is consolidated by them to create your credit reports, which as you now know, lenders use to assess whether to lend you money and at what interest rate.
In turn, their services enable you to track your credit report and score. By regularly monitoring these, you can:
- Spot inaccuracies or fraud: Quickly identify errors or signs of identity theft that may negatively affect your score.
- Track your progress: Regularly reviewing your score helps you understand how your financial decisions affect your credit profile, empowering you to make better choices.
They calculate your credit score as an independent party, making them a key finance gatekeeper.
What’s important to know here is that credit bureaus are independent, for-profit companies but despite being independent from government oversight, they are strictly regulated to ensure they operate with fairness and protect your data.
In South Africa, they must comply with the National Credit Act (NCA) to ensure your information is accurate and safeguarded. You have the right to access your credit report, dispute errors and ensure your data is not misused.
The Credit Information Ombud plays a crucial role in the consumer landscape of the country, ensuring that your rights are protected in the credit reporting process. It is there to help you resolve any disputes relating to your credit reports, making sure any dispute resolution process is handled fairly.
BUT IF A CREDIT BUREAU WAS A PERSON, WHO WOULD THEY BE?
If a credit bureau were given personality traits, they would be organised, the one in the friendship group who pays attention to detail, values integrity and is trustworthy. They would also be:
Responsible: A credit bureau would be the kind of friend who keeps track of important events and shows up on time. They would help you make decisions based on solid information.
Supportive: They’d always be looking for ways to help you avoid mistakes, sharing resources to make sure you’re on the right track, whether it’s about budgeting, credit health or planning for the future.
Analytical: A credit bureau would be the friend who digs deep into the facts before making a decision, giving you evidence-based suggestions to make your money work smarter for you.
Cautious: They’d be the person who warns you about risky decisions and advocates for informed actions, especially when it comes to protecting your assets.
So while your financial wellbeing is ultimately in your hands, you can get by better with a little help from this friend! As the credit bureau doesn’t just provide data. They are a guiding force, helping you keep your credit healthy by supporting you in making every financial choice an informed decision.
Take the next step by checking your credit score today! Don’t forget to leverage Finance365’s free alert service to stay on top of changes while you improve it.
Whether you’re saving for a new car, planning for a dream home or gearing up for a once-in-a-lifetime vacation, Finance365’s unlimited “soft” credit checks won’t impact your score and can help you reach your goals faster.
Start your journey toward better credit right now. Take control with Finance365 and open the door to the future you’ve always wanted.
