Consumer reporting agencies can sometimes seem mysterious. They might appear to be shadowy figures that somehow exert influence over the daily lives of millions. Fortunately, the true picture isn’t so scary. Yes, they do have the ability to impact our consumer decisions and choices, but you’ll see that it’s not difficult to understand the basics of what they do. 

How Consumer Reporting Agencies Operate

Consumer reporting agencies record how individuals and businesses manage credit given them by various commercial enterprises and lenders. The strength or weakness of their consumer reports will influence their abilities to borrow, buy, and rent.  

Consumer reporting agencies compile data into credit reports. That information can serve as the primary basis for qualifying for such things as credit cards and auto loans. Three agencies dominate the U.S. market. Equifax, TransUnion, and Experian aren’t the only consumer reporting agencies but the largest. 

Information is the lifeblood of consumer reporting agencies. They exist only because lenders and other businesses submit information to them. For example, a mortgage company may report that a customer makes monthly payments on time. Another lender may submit documents showing that its credit card holder misses deadlines. 

Why Consumer Credit Data is So Important

Excellent credit history will make it easier for the homeowner who pays on time to qualify for a new loan. For instance, they might want to borrow money to install a backyard swimming pool. Meanwhile, the late-paying credit card holder might receive a rejection when applying for their next credit card. 

Negative credit information can follow a consumer for years.  For instance, seven years is not uncommon for many items. Bankruptcies and other weightier financial reverses can linger for 10 years.

The Challenge of Protecting Credit Data

The nation’s economy depends to a great degree on the ability of people and businesses to receive credit. So, lenders must collect personal information responsibly. Then they have to submit it safely to third-party agencies.

It’s also important that consumers trust lenders to protect their data. The collected data includes not only credit records but also a consumer’s social security number. 

Identity theft is an everyday threat in the 21st century. Thieves look for the weakest section of the information supply chain to attack. Credit reporting agencies are well-fortified against cyberattacks. But what about the lenders who gather consumer information?

Small and mid-size businesses represent a tempting target. So, it's important for your company to prove that it keeps consumer information private. 

Receiving an inspection of your business’ consumer reporting practices has never been easier. The Covid-19 pandemic made physical visits to a location impossible in some cases. So online inspections became necessary. On-site inspections remain the primary method. But virtual inspections give you an additional way to receive a quick assessment.

How to Get Certified to Handle Consumer Data

Do you process consumer data but have yet to receive certification? ComplyTraq is ready to help your organization reach full compliance with the Fair and Accurate Credit Transactions Act. We certify on behalf of all three big consumer reporting agencies—Equifax, TransUnion, and Experian—plus LexisNexis.  

Contact us today and use our experience to help bring your company into complete alignment with all federal consumer data requirements.