What is the role of a credit bureau?

The role of a credit bureau is primarily to keep records of credit history for individuals or companies. This is essential for the functioning of the credit system, as credit bureaus collect and maintain detailed records of consumer credit information, including payment history, credit accounts, and outstanding debts. This information is used by lenders and other financial institutions to assess the creditworthiness of potential borrowers, determine loan terms, and make informed lending decisions.

Credit bureaus aggregate data from various sources, including banks, credit card companies, and other lenders, allowing them to provide a comprehensive overview of an individual's or company's credit profile. By ensuring that lenders have access to accurate and up-to-date credit information, credit bureaus facilitate the lending process and promote financial responsibility among consumers.

In contrast, the other options outline functions that are not typically performed by credit bureaus. For instance, issuing credit cards and managing transactions are responsibilities of financial institutions, while verifying customer identity often falls under the domain of Know Your Customer (KYC) practices and anti-money laundering regulations, which may involve but are not limited to the services provided by credit bureaus.