Credit Bureau Reports: An Integral Role In BusinessThe provision of records by credit bureau reports is a key part in assessing the financial stability and integrity of an an individual or a business. Every credit department will be familiar with the workings of their preferred credit bureau - and accessing a credit bureau report before advancing credit is often a requirement of debtor insurance policies. The company report to credit bureaus covers small, medium and large sized businesses whatever their trading status and legal structure - sole trader, partnership of limited liability company.
Working with credit bureau reporting agencies is an essential step in any decision making process regarding credit. It is only by having detailed information on the current and historic financial situation of a potential customer, be they corporate or individual, that a lending decision can be made. The problem is that credit reporting bureau reports often contain incorrect information and this creates enormous problems that are sometimes virtually impossible to overcome. It is a problem for companies that want to complete on a deal on the one hand, but on the other hand, have to take into account a poor credit bureau report. Indeed, there are some who believe that because so many individuals and companies now have adverse entries on their credit reports, no business would take place if every decision about lending was based purely on credit scoring. Credit bureau reporting agencies collate information from all manner of sources. They have become the CIA of the financial world. It is not just banking and credit card histories that are reported. All credit transactions are logged and can be flagged for a single late payment. Information is gathered regarding bankruptcies, home repossessions and even unpaid taxes to contribute to reports. The information files are then sold on to banks and other financial institutions in order that they can access the information to make credit decisions. Credit bureau reporting agencies are responsible for the maintenance of millions of files on individuals and corporate bodies. In the computer age the collaboration between credit bureaus is often worldwide. Inaccuracies in credit reports does pose a problem. As well as impacting on potential trading as highlighted above, these errors can have a devastating impact on the individuals and companies who are wrongly maligned in their credit records. Errors occur for a number of reasons. It may simply be an input error, although these are becoming increasingly rare as procedures are tightened. Identity theft and fraud has been on the increase which has caused many previously unblemished credit records to be unfairly tarnished. The incidence of disputes over debts has also increased with many organisations arbitrarily posting defaults on credit records before the dispute has been resolved. Credit bureau reports have become an integral part of doing business today but they can only ever give an indication of risk based on past performance. They cannot guarantee the future. |