The Differences Between Consumer and Commercial Credit Agencies
Updated: Jun 30
Consumer credit agencies, also known as credit reporting agencies, are companies that collect and maintain information about an individual's credit history and financial behavior.
These agencies use this information to create credit reports and credit scores, which lenders, landlords, and other businesses use to evaluate an individual's creditworthiness and financial risk. There are three major consumer credit agencies in the United States: Equifax, Experian, and TransUnion.
On the other hand, commercial credit agencies focus on providing credit information and risk assessment services for businesses. These agencies collect and analyze businesses' financial data, including their credit history, financial stability, and payment behavior. They use this information to create credit reports and ratings for businesses, which lenders, investors and vendors use to evaluate a company's creditworthiness and financial risk.
One key difference between consumer and commercial credit agencies is the type of information they collect and analyze.
Consumer credit agencies primarily focus on an individual's personal credit history and financial behavior, including information on their credit cards, loans, and other debts. On the other hand, commercial credit agencies focus on a company's financial performance and credit history, including information on its revenues, expenses, and debts.
Another difference between the two types of credit agencies is how they generate revenue. Consumer credit agencies typically generate revenue by selling credit reports and scores to individuals and businesses. Commercial credit agencies, on the other hand, may generate revenue through subscription fees or by selling credit reports and ratings to lenders and investors.
There are several other key differences between consumer and commercial credit agencies:
Purpose: The primary purpose of consumer credit agencies is to provide individuals with a way to monitor and improve their credit scores. Commercial credit agencies, on the other hand, provide businesses with the information they need to make informed financial decisions and assess the creditworthiness of other businesses.
Regulation: Consumer credit agencies are regulated by the Fair Credit Reporting Act (FCRA), which sets rules on how these agencies can collect, use, and share information about consumers. Commercial credit agencies are not subject to the same level of regulation, although they may be subject to industry-specific regulations.
Accuracy of information: Consumer credit agencies are required to maintain accurate and up-to-date information about an individual's credit history. Suppose a consumer disputes the accuracy of their credit report. In that case, the credit agency will have to notify the original data furnisher, who will then need to investigate the dispute and make any necessary corrections. Commercial credit agencies may not be required to follow the same strict standards for accuracy. However, they are generally expected to maintain accurate and reliable information about businesses.
Scope of coverage: Consumer credit agencies cover a wide range of credit-related information, including credit card and loan accounts, bankruptcies, debt collections and court judgments. Commercial credit agencies may substitute a similar degree of information, but they may also include additional data, such as information on a company's financial stability, management team, and industry outlook.
Credit scores: Consumer credit agencies use a variety of factors to calculate an individual's credit score, including payment history, credit utilization, length of credit history, the types of credit accounts an individual has, and if they have a debt sent to a collection agency. Commercial credit agencies may use similar factors to calculate a company's credit score, but they may also consider additional factors, such as the size and stability of the company, its industry, and its management team.
We take pride in our commitment to delivering maximum results for our clients. Fair Capital reports both consumer and commercial accounts to the major credit reporting agencies as part of our efforts to encourage debtors to pay their debts.