The Complete Knowledge of Credit Bureau Agency
A Credit bureau agency is an organization who collects and researches the credit information of individual and business providing it to the lending institution.
Think about risk and profit when you really want to gain profit and of course will have to take the risk. But you have to do these two things simultaneously because If there is no risk there no Profit.
At this moment, all lender or bank or NBFCs really desire to make a profit on interest but still don’t want to extend credit risk. Why they don’t want to extend because of only default risk
Here who can make them assure that providing loan cannot be so risky but a good source of economic development, the only person can be a guarantee is Credit Bureau Agency?
The Role of Credit Bureau Agency
The Role of credit bureau agency comes when Bank or NBFC or any financial institution require credit history about the customer (to whom a bank will provide loan) from a credit bureau agency.
Now Credit bureau agency collects some informational credit history data from the bank where a customer had previously taken a loan. It analyzes and researches then It allocates to the respective needed financial institution.
All the credit bureaus are private businesses but are under subject to laws and regulations.
Each country have different controlling bodies to control the credit reporting agencies like
in USA, Fair Credit Reporting Act regulate the Credit bureaus.
In India, Reserve Bank of India regulates the credit control agencies.
A major important role is played by the Credit bureau agency
It inspects creditworthiness of an individual to look after the paying capacity of debt
This informs the bank or any financial institution about the whole credit history record of a customer
It shows some credit score by calculating through their own method
Through Credit bureau agency, transparency, no-risk, and a fair financial market would be possible
Helps in fraud detection and prevention in future risk
How the credit bureau industry began
When the Era of loan started on 2000 BCE, at that time people dealing loan on the basis of faith. But from to time, it had been becoming risky and unusual to grant a loan to anyone.
Extending credit became so difficult and There couldn’t be any prediction that whether the individual can be capable of paying a debt or not.
In 1860, Some local merchants began to keep the record of each individual’s credit records in order to need the future requirement. So on the basis of list and records of an individual, Merchants provide loan to those individuals.
So in this way, the first type of credit bureau industry was formed by Merchant. That’s why It seriously started in 1920 with the introduction of retail installment credit
It was continuing to the 1950s with the introduction of revolving credit accounts.
Major Credit Bureau agency in the world
All of us would say 3 names which are major credit bureau agency are namely Experian, Transunion, and Equifax. These three credit bureaus exist all most all over the world.
These agencies retain information about 200 million American only.
Experian was first founded in 1996 headquartered in Dublin, Ireland. It reported creating of revenue $4.6 billion dollar and employs 17000 people in company.
Experian collects and aggregates information about 235 million individual us consumers & 25 million US business. Based in Dublin, Ireland, The company operates in 37 countries in the world. It has headquarters in the United Kingdom, The United States, and Brazil.
Fair Credit Reporting Act (FCRA) regulates Experian. The Fair and Accurate Credit Transactions Act amended the FCRA to provide the consumer free credit report per each 12 month period by the credit reporting agency.
Transunion was first founded in 1968 headquartered in Chicago, IL as holding a company for the railroad leasing organization, Union Tank Car Company(source-Wikipedia). It is an American consumer credit reporting agency.
Transunion collects and arranges over 1 billion individual consumers in over 30 countries. It has a global customer base of over 65000 business.
In addition to It has records of 90000 data sources including financial institution, private databases, public data repositories. Eventually, It deals with more than 3 billion updates per month from Data Providers.
Equifax was one of the oldest credit bureau agency which was founded by Cator and Guy Woolford in Atlanta, Georgia, as Retail Credit Company in 1899.
It has the U.S $3.1 billion in annual revenue and more than 9000 employees working worldwide in 14 countries as per record in 2017.
Normally Equifax agency operates mainly on business to the business sector. This agency sells consumer credit and Insurance report, and related analytics to businesses in a range of industries.
Moreover, It’s business customer include retailers, the insurance company, health care providers, utilities, government bodies, as well as bank, credit union, and financial institution.
These are the 3 pillar credit reporting agency which is being operated throughout the world. They operate millions of millions of consumer credit reports.
Another important credit bureau in some major country
There are lots of credit bureaus who operate in some of the major countries. They operate their organization very successfully and researching millions of consumer data.
Here are some of the economically developed countries where CBA are operating their business.
USA(United States Of America)
In the USA there is an act Fair Credit Reporting Act which controls America’s consumer credit reporting agencies. Most of the credit information is being operated by these four credit reporting agency
UK (United Kingdom)
In the UK, Credit reporting agency is otherwise known as a credit reference agency. These are Four credit reference agencies who analyze and researches the consumer credit report in the UK namely as
- Call credit (acquired by Transunion Source–checkmyfile.com)
- Credit Safe group
This is My home country and here mostly one word comes to every person is that CIBIL.
In India, Credit information Company is also called as Credit Bureau. CIC collects data from various sources and analyzes it then provide it to the other lending institute.
The Credit information company was licensed by Reserve Bank of India under credit information company act, 2005.
There are four well-recognized credit information companies in India as of date, they are:
- High Mark Credit Information Services
Germany is currently the 4th largest economically developed country in the world. This country has 3 credit bureau agency which collects, analyze and researches the consumer credit data. They are such as
Now Japan is the 3rd largest economic developed country in the world. There are 4 credit agencies who operate their business in Japan
- Teikoku Databank
- Tokyo Shoko Research
- Risk Monster
- Creditsafe K.K.
Hence, Credit or bad debt risk has been really reduced by only the innovation of credit score. This credit scores are being formed by the Credit Bureau Agency.
So that People really become aware of their credit score for their future credit approval and thanks to the Credit Bureau Agency.