Credit Reporting Agencies

Credit Reporting Agencies - Importance

The functions and importance of credit reporting agencies :

The principal purpose of credit reporting agency is the protection of industry and commerce against unnecessary losses. On the other hand positive commercial information induces the inquirer either to continue an existing business relationship or to initiate new business. Viewed in the way, credit reporting agencies play a vital role in the development of trade and commerce. The need to obtain information on the reliability and financial status of a business partner to a transaction being finalized or the investigation of an existing business relationship is almost as old as trade itself.

Limiting risks through proper information :

Times have changed but the need to verify the credit standing of a business partner is as important as never before. The number of business has increased tremendously. Furthermore, the growing mobility of the business community as well as the rapid expansion of trade beyond regional boundaries render today’s business less transparent. Also, traditional methods of payment are undergoing rapid change. This climate of increased uncertainty obliges today’s decision maker to obtain timely quantitative and qualitative data on his business partner.

The functions of credit reporting agencies :

By the middle of the past century, up-dated lists of insolvent firms or owners of bounced checks were published regularly in trade journals. Responding to rapidly increasing demand, research and commercial credit had to intensify. This development lead to the formation of credit reporting agencies. Such companies have been serving industry and trade ever since by providing early warning signals on trouble ahead. In the course of their customary investigations credit reporting agencies pay particular attention to the financial aspects and to the payment record of a subject under review. Moreover, regular personal interviews are conducted to obtain in-depth qualitative information. The resulting report becomes an important instrument to judge the credit worthiness of a company.

Commercial credit reports promote economic growth :

Very often this vital function unnoticed. Credit reports enhance new business on national and international levels. It is a well-known fact that credit reports can be instrumental in building long term business relationships. For this very reason questioning by a credit reporting agency should not be regarded as painful intrusion in a company’s affairs. Rather, it should be viewed as an opportunity for positive public relations. Moreover an experience entrepreneur knows too well that refusing to cooperate may be judged negatively by the user of a credit report.

Summary :

Credit reporting agencies have become a vital element in today’s landscape of industry and trade. Our products has become an indispensable tool in corporate decision making. We are proud of this role and contribution which is the result of mutual effort and goodwill of the parties involved.