What's in Credit Reporting Agencies

Existence of Credit Reporting Firms

Before licensed moneylenders issue credit notes out to borrowers, they'll need to check credit scores of the respective lendees. This is one of the crucial methods in determining whether the other party or parties is able to repay the debts by introducing a mandatory grading system. In general, there are two main types of Credit Reporting Agencies; Business intelligence & Consumer creditworthiness. The former is mainly used to identify company's credit standing and the latter for individual's capacity basis. Learn more about both parties here and put yourself into an advantageous position.

Why big lenders chose to examine Credit Reports

An easy way out for creditors is to approved any kinds of loans being submitted. Why is there a need to undergo an arduous process of liaising with Credit Bureaus or other relevant authorities? Due to the high default borrowing rates in the industry, moneylenders are aware of such risks hence unwilling to loan out sums that exceed the cost of capital in any given companies.

Established lenders, often pay research groups a cut of profits, engage credit report services to scrutinize company's borrowing profile on an in-depth manner. Two types of reports will be generated - Primary research & Secondary movement. The credit report churned out contains vital information such as Financial analysis, Data mining collections, Balance sheets and more. By doing so, credit lenders may access the firm's financial status as well as the types of collateral to seize when facing payment failures.

Personal loans issued based on Credit Reports

Typically for smaller loan segments, Micro lenders, can finance personal loans and gain profits from there on. However, they're in danger as should consumers default on any payments, the cash flow of these micro lenders will be jeopardized due to the small but capital-intensive nature. Therefore, it becomes important to check the borrower's credit scores and issue out loans based on the credit grading hierarchy.

One of the more commonly used methods is to contact Credit Bureau agencies to identify the borrower's history in making loan repayments and determine the exact scores before disbursements. In fact, credit reports are available almost in every lending firms and these creditors may leverage on them to identify good or bad debtors in servicing loan tenors.

Credit Reports & Scores through Credit Education

Always remember, there are many risks to bear in the realm of financing world. Licensed moneylenders, established or fresh startups, need to understand the borrower's credit ratings by acquiring necessary educations. Most of the time, there are professional courses out there that offer to help lending firms identify Credit reports as well as putting Credit scores based on the individual's financial health and degree of credibility. It is almost a non-speculative measure for adopting business intelligence human resourcing approach. The nature of this industry has made many lenders suffer massive losses albeit the lucrative profits being presented to them.


Do leverage on credit reporting agencies by hiring agents to draft out credit reports and modes of compensation should the borrower's chose to default on loan repayments or even to the extent of bankruptcy. This is to protect moneylenders from making potential losses as opposed to running legitimate businesses that aims to help lendees to get out of debts.