Consumer Reporting Agency Definition

Cite this article as:"Consumer Reporting Agency Definition," in The Business Professor, updated March 18, 2019, last accessed August 12, 2020, https://thebusinessprofessor.com/lesson/consumer-reporting-agency-definition/.

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Consumer Reporting Agency Definition

Consumers reporting agencies are organizations that produce credit reports. A credit report shows your payment behavior and places you have worked. The reporting agencies then sell this information to creditors, insurers and employers. The credit bureau is the most common reporting agency.

A Little More on What are Consumer Reporting Agencies

Credit reports impact how US citizens access credit, employment and insurance. Due to the great importance of these reports, the activities of CRAs are regulated by the government through Fair Credit Reporting Act, FCRA, and Fair & Accurate Credit Transactions Act, FACTA. These regulatory bodies have created restrictions on how reporting agencies operate. This includes giving a free credit report every year.

What are some examples of consumer reporting agencies?

There are three major CRAs in the US:

  •         Equifax – It serves different industries including financial services, credit card, healthcare, retail and the government. Headquartered in Georgia and having been in operation for more than 100 years, the CRA does both commercial and consumer credit reporting.
  •         Experian – This is the largest of the three CRA. It is very active in offering solutions for merchants, creditors and lenders. Besides credit reporting, it offers identity theft protection and credit monitoring services.
  •         TransUnion – This CRA has been in operation for more than 40 years, has garnered more than 500 million consumers details and it works with about 45,000 businesses. Besides credit reporting, the CRA provides risk portfolio management.

There are other smaller CRAs including Telecheck, Tenant Data Services, Teletrak, LexisNexis, Insurance Services Office and Medical Information Bureau. Each year, a consumer is entitled to a free credit report through annualcreditreport.com.

References for Consumer Reporting Agency

Academic Research on Consumer Reporting Agency

  • Consumer reporting of adverse drug reactions, Aagaard, L., Nielsen, L. H., & Hansen, E. H. (2009). Drug safety, 32(11), 1067-1074. This paper examines at reporting of adverse drug reactions, ADRs, in Denmark. It observes that, healthcare professionals have always taken the role of reporting adverse drug reactions. Based on the sample population from this study, it shows that ADRs have not always been effective. The study examined Danish ADRs between 2004 and 2006 based on category of reporters, seriousness of ADR and suspected medicine.
  • An overview of consumer data and credit reporting, Avery, R. B., Calem, P. S., Canner, G. B., & Bostic, R. W. (2003). Fed. Res. Bull., 89, 47.  This article examines the way credit reporting agencies compile data and it gives details on how the activities of credit reporting agencies are regulated. It then analyzes the specific details that these credit reporting agencies collect.
  • Consumer credit scoring: do situational circumstances matter?, Avery, R. B., Calem, P. S., & Canner, G. B. (2004). Journal of Banking & Finance, 28(4), 835-856. This paper observes that while credit history is a great tool for lenders and borrowers, failure to consider situational circumstances will raise statistical issues that affect the ability of these agencies to score. A sample from credit reporting agencies show that failure to consider these circumstances can diminish the effectiveness of consumer data. The author, however, notes that there are difficulties involved in using situational circumstances when developing credit reports.
  • Reporting agency performance: Behind the SEC’s enforcement statistics, Velikonja, U. (2015). This paper examines the performance of reporting agencies and the threats from Congress to reduce their budget for failure to produce reliable data. The paper suggests that congress should not reduce the budget due to fluctuations in enforcement.
  • Social returns to public information services: Statistical reporting of US farm commodities, Hayami, Y., & Peterson, W. (1972). The American Economic Review, 62(1/2), 119-130. This paper shows two models that can be used to estimate social returns to the public information improvement. It shows these models by analyzing US farm commodities reporting.
  • Using credit reporting agency data to assess the link between the community reinvestment act and consumer credit outcomes, Muñoz, A. P., & Butcher, K. F. (2013). This paper uses a regression discontinuity model to examine the effects of Community Reinvestment Act the outcomes of consumer credit. The study collects data from Federal Reserve Bank in the New York’s Consumer Credit Panel dataset.
  • Rethinking the Fair Credit Reporting Act: When requesting credit reports for employment purposes goes too far, Gallagher, K. (2005). Iowa L. Rev., 91, 1593. This paper examines the performance of the Fair Credit Reporting Act. It suggests that the act should be amended to limit the rights of employers who seek credit reports for employees who whom the reports have no relevance. It also suggests that, Congress can enact employment legislation that prohibits employers from discriminating employees based on credit reports.
  • Fair credit reporting act developments, McEneney, M. F., & Kaufmann, K. F. (2003). Bus. Law., 59, 1215. This paper studies the developments that have been observed on the Fair Credit Reporting Act. The author observes that; the Fair & Accurate Credit Transactions Act was created to ament the FCRA.
  • Privacy protection for consumer transactions in electronic commerce: why self-regulation is inadequate, Budnitz, M. E. (1997). SCL Rev., 49, 847. This article seeks to answer the question, how well do credit reporting agencies protect consumer data? It starts by surveying the concerns of consumers and the vulnerability of the CRA systems to show different ways in which the systems can be attacked. It also analyzes regulations that have been put place to protect consumer data and then offers a model through which the privacy of consumers can be protected.
  • The Quest for Fair Credit Reporting and Equal Credit Opportunity in Consumer Transactions, Griffith, E. (1994). U. Mem. L. Rev., 25, 37. This paper examines the effectiveness of credit reporting agencies based on how they operate. It analyzes the needs of these agencies, the accuracy of data they provide, false pretenses and how the agencies handle disputes. It also looks at situational circumstances that can affect the credit report of consumers.
  • The good consumer: credit reporting and the invention of financial identity in the United States, 1840–1940, Lauer, J. (2010). Enterprise & Society, 11(4), 686-694. This is a brief history of consumer credit reporting in the US since the nineteenth century. While the report looks at the institutional and technical developments, it concentrates more on financial identity and how it has affect the credit reporting industry.

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