What is the primary role of a credit bureau?

The primary role of a credit bureau is to collect and maintain credit information of individuals. Credit bureaus are organizations that gather data from various lenders and financial institutions about consumers' credit histories. This data typically includes information on credit accounts, payment history, outstanding debts, and public records like bankruptcies.

The information collected by credit bureaus is crucial as it helps establish an individual’s credit report, which lenders use to assess the creditworthiness of potential borrowers. By maintaining accurate and up-to-date credit information, credit bureaus enable lenders to make informed decisions regarding loan approvals, interest rates, and credit terms. They play an essential role in the broader financial system by facilitating access to credit, helping consumers access loans based on their credit history, which reflects their financial behavior over time. In this way, the credit bureau's primary function supports responsible lending practices and overall economic stability.