Top Vendors for Credit Reporting Agencies

A Guide to Credit Reporting Agencies

Credit information is collected on most American companies on an ongoing basis through a variety of means.  Acquisitions, debt history, and borrowing practices are all filed away in central data pools that large financial institutions can access to determine whether or not your company will be eligible for venture capital.  Credit reporting agencies are those central data pools: they collect and distribute financial data to institutions governing our financial life.  (They’re not to be confused with credit bureaus, which collect data on individuals.)  Let’s consider in more depth who they are, what they do, and why it matters to you.

Who They Are

There are three major credit reporting agencies in the United States: TransUnion, Equifax, and Experian. 

Experian is the largest of these, a global enterprise headquartered in Dublin, Ireland that has branches in 36 countries, employs over 15,000 people, and whose revenues were $3.88 billion in 2010.  2011 revenues have been released and project a 9% increase, to $4.24 billion.  It markets its products primarily to businesses, but also has ventures in the consumer market.

Founded in 1899, Equifax is the oldest of the three agencies, and carries information on over 400 million credit holders worldwide.  It’s headquartered in Atlanta, Georgia, had revenues of $1.89 billion in 2010, and operates in 14 countries.

Headquartered in Chicago, TransUnion is the third largest credit bureau in the US, and aggressively markets its credit reports directly to consumers.

What They Do

These three titans have enormous traction with your overall credit rating.  They collect all manner of data on your company’s spending and borrowing habits, and process it into a central database that uses complex algorithms to determine your risk assessment – the linchpin of your borrowing power. 

They then sell that information and its analysis to financial institutions looking to leverage their risk management advantage.  They also sell the information back to you, so that you can monitor how and why your credit rating moves as it does.

Why It Matters

The information that allows lenders to determine the risk or reward of advancing you funds for a new venture is extremely valuable, both to you and to the companies buying it.  (If it weren’t, they wouldn’t have billions of dollars in revenue.)  Good risk assessment allows banks to minimize their losses and maximize their investment gains.

It also allows – or disallows – your company from making productive investment decisions.  If you’re judged by the collected information to be too high of a risk, your company will be unable to invest in new properties, manpower, or other growth opportunities.  It’s the lifeblood of your business potential, and it’s valuable to you indeed.  Without a strong rating determined by these firms, you’re unlikely to achieve fiscal growth or even solvency.

Conclusion

Credit reporting agencies are extremely potent institutions in modern life, and the way they do business affects the character of yours.  It’s a good idea to understand how they work, and to the degree that you can, to keep them on your side.