Individual credit report company is an organization, which takes up the responsibility of issuing credit scores for the credit-worthiness of individuals. An individual credit report company is also known as a Consumer Credit Reporting Agency or a Credit Bureau.
General activities performed by individual credit report company:
The primary function of an individual credit report company is to allot credit ratings to issuers having certain types of debts. In maximum cases, the common issuers these individual credit rating companies come across are non-profit commercial organizations, companies, or the national governments issuing debt-like securities, which are sold on a secondary market.
It is part of the duty of the credit bureau to measure the credit-worthiness of the clients, as to whether they are financially capable of repaying the loans on time or not. The credit-worthiness is a very important factor in the sense that, it exerts an effect on the rate of interest applied on the loans taken.
However, this rate of interest is not similar for all, and varies from to person to person, mainly on the basis of the total loan amounts.
The consumer credit reporting agency widens the range of alternative investments by offering simple, free measurements of relative credit risk. This normally increases the market efficiency by bringing down the costs for lenders and borrowers simultaneously. Successively, this increases the total supply of risk capital in the economy, thereby strengthening its growth. In fact, this activity opens the capital markets, inviting more diverse categories of borrowers.
Individual credit report company and the modern corporate world:
In the modern corporate sectors across the globe, the process of credit rating is allotted mainly by agencies.
Names of a handful of internationally recognized and reputed credit rating agencies are as follows:
Fitch Ratings (United States of America)
Standard & Poor’s (United States of America)
A. M. Best (United States of America)
Moody’s (United States of America)
Dominion Bond Rating Service (Canada)
Pacific Credit Rating (Peru)
Baycorp Advantage (Australia)