Credit referance agencies,who do they benefit

kenshaz · 25 October 2006 at 1:08PM

Credit reference agencies do they benefit the consumer or are they purely for the benefit of the institutions.

Astaroth · 25 October 2006 at 2:15PM

They were designed for the benefit of the financial institutes however benifit to them would have knock on benefit to some customers.

If they didnt exist then the amount of information a lender would have to decide on if they should extend credit, and if they do how much they should charge for this service would be much higher risk. Lenders typically do not like risk and so will air on the side of caution. If the credit agencies didnt exist you would most likely see much less lending and when lending is made then a higher APR applied to those currently seen as good credit risks.

Whilst it is not the purpose they were founded for they also now serve the consumer as a way to spot suspicious notes against their file (ie indentity fraud etc)