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Credit Reporting Agencies
Private companies that collect and sell consumer and commercial trade credit reports are known as credit reporting agencies. The large databases that these agencies maintain ensures that information is available on most businesses to any requesting creditor for the purpose of evaluating a request for open account credit terms. Services and reports vary by credit reporting agency, and many agencies require data contributions from creditors to ensure that database information remains fresh and timely. Credit associations can be considered credit reporting agencies, because sometimes they maintain their own databases of information gathered from their members' trade experience.
Before using the services of reporting agencies, a creditor should weigh the benefits provided by the information against the cost of the information. The cost of each business credit report depends on a number of factors including:
- The type of report ordered,
- The quantity of reports ordered annually,
- Whether the service is "pay as you go" or on an annual contract,
- Whether the report is on a domestic of a foreign account.
Note that credit reporting services usually:
- Offer quantity discounts based on usage,
- Allow subscribers to carry over a certain percentage of their unused reports each year,
- Allow subscribers to order reports on companies not found in the credit reporting agency's database,
- Offer discounts to subscribers that share payment information with the credit reporting agency each month.
Two of the largest credit reporting agencies are Dun & Bradstreet, and Experian. A credit bureau, or credit reporting agency is also occasionally referred to as a mercantile agency.
Edited by Michael C. Dennis, author of "1001 Collection Tools and Tips."