Furnisher: What It is, How It Works, Examples

A furnisher is a company that provides financial information about a consumer, including credit history, to credit rating agencies like credit bureaus. Credit bureaus then include that information in credit reports, which lenders use to make decisions on whether to approve borrowers for loans.

How Furnishers Work

Furnishers play an important role in helping businesses, including lenders, make decisions about whether or not to grant credit to an individual who has requested it.

Before providing credit, whether that may be in the form of a mortgage, a car loan, a student loan, or a credit card, to an individual, a company will want to understand the potential risk that they are taking on.

In order to make an estimate as to the creditworthiness of an individual, financial institutions and other companies want to collect as much historical information about the borrower. They will want to know how much debt the individual has, what their existing line of credit is, and whether they have declared bankruptcy or had a foreclosure in the past. Essentially, they are assessing a borrower's risk.

Furnishers and Legal Regulations

Like lenders, credit reporting bureaus and other entities involved in some way in the process of granting or managing credit, furnishers must abide by clear rules and regulations. In the U.S., these regulations for furnishers are enacted and enforced by the federal government.

All of the information that a company can collect about an individual is compiled and analyzed in order to establish a consumer report. One of the most commonly-recognized consumer reports is a credit score, which is a score used to indicate whether a consumer presents a credit risk.

In the United States, the Federal Trade Commission (FTC) regulates the activities of companies that provide consumer information. Furnishers are required to abide by the provisions defined in the Fair Credit Reporting Act (FCRA). These regulations cover a broad scope and include the methods used to collect consumer information, the sources of the information, and the accuracy of the information.

A consumer may directly dispute the information provided by a furnisher, if they believe that the information contained in a consumer report or relating to an account is inaccurate. This can be important, since this inaccurate information can have negative consequences on the individual’s ability to get credit. Furnishers are required to correct, delete, or verify information within 30-45 days once they receive dispute details.

Examples of Furnishers

A furnisher can be one of several types of businesses. Furnishers are typically organizations that provide financial services, such as banks and credit card companies. They may also include debt collection agencies and other companies that process financial information.

The Bottom Line

A furnisher provides financial information to rating agencies, which then include it in your credit report. This information, like your on-time payment history and amount of debts owed, then impacts your credit score. To keep a higher credit score, make sure you make at least all you minimum monthly payments on time and try to reduce your overall debt burden, or debt utilization ratio, which is the amount of debt you use in proportion to the amount of credit available to you.