What is the primary function of credit bureaus?

The primary function of credit bureaus is to collect and provide credit information. Credit bureaus gather data from various sources, such as banks, credit card companies, and other financial institutions, to compile a consumer’s credit history. This information includes details about credit accounts, payment history, balances, and public records such as bankruptcies or judgments.

The data collected by credit bureaus is then used to generate credit reports, which are critical for creditors in assessing the creditworthiness of potential borrowers. Lenders review these reports to determine whether to extend credit and under what terms. Additionally, credit bureaus provide credit scores based on the information in the reports, which helps both consumers and lenders make informed decisions.

While managing debts, giving financial advice, and offering loans are important aspects of personal finance and credit management, these are not functions performed by credit bureaus. Their specialized role is solely focused on the collection and dissemination of credit-related information.