What Is a Credit Reporting Agency?

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Credit reporting agencies keep track of an individual's loan history, payment history and general financial status, and then assigns them a rating score. Understand what credit reporting agencies do with information from a financial manager and currency trader in this free video on finance.

Part of the Video Series: Credit Reports & Credit Scores
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Video Transcript

I'm Roger Groh. Today we're here to talk about credit reporting agencies. What do they do, you know, what do they do? Well if you think about it in the old days you used to go to your neighborhood bank in your little town where they knew you and they knew your mom and your dad and your brothers and your sisters and everyone within your own family and they had an idea of what kind of person that you were and you sat down with the banker and then that banker thought about what your plan was you know Mr. Smith I want to buy a car or I want to buy a house or a farm or whatever it might be. You thought about you and your family and decided whether or not to make the loan. Well in today's world it is pretty difficult because traditionally the banker doesn't know you and in fact most loans today are made over the internet with very little personal contact. So the question is how does the banker, the person on the other end who is making the loan to you how do they size you up? Well out of that has sprung a business called credit reporting agencies where if somebody does make a loan to you whether the amount of that loan and the number of times that you have made payments and whether they have been on time or not are all reported into data bases. You can get copies of that if you Google free credit report they'll e-mail one to you, it's free and you can see and check your own history for yourself. But out of that sprung these companies whose job it is to do nothing but track whether you have made your payments on time and that is really the nature of their credit reporting agencies and I'm Roger Groh.


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