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9 Things You Should Know About the Credit Reporting Agencies

Credit Suite - Monday, August 15, 2016

There are three major companies that collect business information and publish it. These are Dun & Bradstreet, Experian, and Business Equifax. D&B is by far the largest, but the other two are catching up quickly.

The #9 thing you should know about the business credit reporting agencies is to know who uses which bureau. Dun & Bradstreet is the most common, and is used by most vendors to extend lines of credit. Landlords use them to approve office leases as well. Experian is used by many credit card companies and non-traditional business lenders.

Equifax is called the “Small Business Financial Exchange” and is the most important for cash lenders such as banks. To concentrate on building corporate credit for only one reporting agency and not the others will give you lopsided credibility. So a business needs to build business credit with all three of these major credit reporting agencies to achieve genuine credibility.

Dun & Bradstreet is the biggest and major business credit reporting agency. Commonly known as D&B, the agency provides information on businesses and corporations for use in credit decisions. Dun & Bradstreet is a publically traded company with headquarters in Short Hills New Jersey, and trades on the New York Stock Exchange.

The #8 thing you should know about the business credit reporting agencies is how big D&B is compared to the other business credit reporting agencies. Dun & Bradstreet has almost over 10 times the amount of records for business as the next closest reporting agency, Experian.

Dun & Bradstreet has a massive presence worldwide. Of over 200 million records they had on file in 2012, they reported over 54 million were from Europe while only about 33 million were from North America. Another 12 million records were from Latin America, while only 27 million records were from Asia Pacific .The lowest volume of records on file was in Africa, with only about 1.1 million records on file, and the Middle East, with only about 1 million records on file.

The #7 thing you should know about the business credit reporting agencies is to know how Experian really got their start. Experian was formerly a division of TRW, an automotive electronics giant. TRW was originally founded in 1901 as the Cleveland Cap Screw Company. They started producing screws and bolts and grew to produce many parts for the aviation and automobile industry.

In the early 1960s, TRW started a consumer credit information bureau, collecting and selling consumer data, and eventually became known as TRW Information Systems. TRW Information Systems continued compiling data and were the first to start offering consumers direct credit report access in 1986.

The #6 thing you should know about the business credit reporting agencies is to know Experian got into serious trouble. In 1991, rampant problems started appearing with TRW reported credit data. Thousands of people in a town in Vermont had tax liens inaccurately reporting against them. Similar cases started appearing in the entire northeast, forcing the deletion of countless tax liens across the states of Vermont, Rhode Island, New Hampshire, and Maine.

Dozens of law suits were filed against TRW, claiming sloppy procedures to create credit files, lack of response to consumer complaints, and re-reporting previously deleted incorrect data. All cases were settled out of court. TRW then created a database known as the Constituent Relations Information Systems (CRIS). This system’s sole purpose was to gather personal data on 8,000 politicians who held opinions on TRW.

The #5 thing you should know about the business credit reporting agencies is to where Experian’s home office really is. Experian’s headquarters are in Dublin, Ireland. They have operational headquarters in Nottingham (UK), Costa Mesa (California), and São Paulo (Brazil). Experian plc is listed on the London Stock Exchange (EXPN) and in a constituent of the FTSE 100 Index.

The #4 thing you should know about the business credit reporting agencies is Equifax’s age and history. Equifax is the oldest and largest consumer credit bureau in existence today. They were originally founded in 1898, 70 years before the creation of TransUnion.

Two brothers, Cator and Guy Woolford, created the company. Cator actually got the idea from his grocery business, where he collected customers’ names and evidence of credit worthiness. He then sold that list to other merchants to offset his own business costs.

The #3 thing you should know about the business credit reporting agencies is that consumer credit reporting actually got its start in the grocery business. The success of selling his list to other grocers led Cator and his attorney brother, Guy, to Atlanta, where they set up what would become one of the most powerful industries in existence today. The Retail Credit Company was born, and local grocers quickly started using the Woolford service, which expanded rapidly. By the early 1900s, the service had expanded from grocers to the insurance industry.

The #2 thing you should know about the business credit reporting agencies is to know the data that the bureaus used to collect. Equifax also provided companies with services including investigating insurance claims and making employment reports when people were seeking new jobs. Back in the 60s, most of Equifax’s credit work was actually being done by their subsidiary, Retailers Commercial Agency.

In the late 60s, Equifax started to compile their data onto computers, giving many more companies access to this data – if they chose to purchase it. They also continued to buy up many more of their smaller competitors, becoming larger and also attracting the attention of the Federal government. They began to earn a bad reputation for selling data to anyone who wanted it, whether or not the data was accurate.

Equifax was gathering details about people including their marital troubles, jobs, school history, childhood, sex life, political activates, and more. There was no limit to the kind or amount of data they were collecting.

Some of the information was factual, while large swathes of the rest were completely false; some information was literally no more than rumors. Equifax was even said to reward their employees for finding the most negative information about consumers.

The #1 thing you should know about the business credit reporting agencies is that Equifax’s unethical practices led to the creation of the Fair Credit Reporting Act. In response to Equifax’s actions and unethical data collection procedures, when the US Congress met in 1971 it enacted the Fair Credit Reporting Act. 

This new law was the first to govern the information credit bureaus and regulate what they were allowed to collect and sell. Equifax was no longer allowed to misrepresent itself when conducting consumer investigations and employees were no longer given bonuses on the basis of the negative information they were collecting, the standard practice in the past.  

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