The FTC enforces a number of federal laws concerning consumer credit and takes legal action against creditors who violate those laws. Because consumer education is one vital aspect of a law-enforcement program, the Commission wants consumers to know what their credit rights are and how to use them better. This FTC Focus describes how consumers can obtain and establish credit accounts, maintain or improve credit histories and resolve credit problems. This does not mean that all consumers who apply for credit will receive credit, but it does mean that creditors may consider only such things as income, expenses, debts and credit histories when choosing applicants. While creditors usually consider a number of factors when deciding whether to grant credit, most rely heavily on consumers' credit histories, which they obtain from local credit bureaus.
Credit bureaus are organizations that gather and sell credit information on consumers.
These bureaus, sometimes called consumer reporting agencies, are the principal source of information for credit histories. A credit-history report is based on information supplied over time by creditors with whom consumers have done business. Creditors are not required to forward such information, but many do so. The reports contain records of consumers' credit-card payments and loan payments, as well as employment information and other matters of public record, such as court judgments and bankruptcies. From these reports and sometimes from other sources, such as banks or employers, creditors determine whether consumers are likely to be good or bad credit risks.