The market is a big stage for commodity trading. The market exists to meet customer requirements, and the market develops due to the existence of a healthy competitive atmosphere. Public or private is not the primary feature of a market. The most important trading objects in the business credit reporting market are business credit reports (and credit bureau scores – credit bureau scores can be viewed as condensed credit reports formed for a single purpose). During the “credit marketization” years, some people argued that “credit investigation is to do (credit risk) assessment”, and the basic business of credit agencies is to do scoring and sell scoring. In fact, credit bureaus can completely not score (or can sell third-party developed scores, such as the FICO score in the United States), and the scoring institution does not have to be a credit bureau (FICO is not a credit bureau), but the institution that collects credit transaction data and makes credit reports must be a credit bureau.
Due to the inherent characteristics of high fixed cost and low operating cost of enterprise credit report business, credit investigation practitioners usually mine the value of credit report data as much as possible on the basis of laws and regulations to obtain profits. Credit market participants are mainly credit reporting agencies, bank credit agencies, credit information service agencies and consumers.
At the same time, it shows that if the regulators of the credit investigation industry only supervise the information service institutions, can not supervise the bank credit institutions, or do not build communication channels between consumers, they can not perform the supervision function of the credit investigation market.
Most credit investigation services are for enterprises (B2B). This includes the provision of corporate credit reports and scores, the provision of credit risk control or anti-fraud services, and the provision of analytical and advisory services. The credit investigation service for enterprises indirectly serves consumers. A small number of credit investigation services are direct consumer services (D2C). This includes the interpretation of credit reports and scores for consumers, the processing of objections, and some services for loan assistance or diversion (the latter of which may often require a specialized license). Scoring model development and anti-fraud services are generally not subject to license management, although they can still be part of the credit reporting industry.
Some countries use a franchise approach to manage the credit investigation market, issuing different licenses for reporting agencies and credit information service agencies. Different types of participants in the credit investigation industry, or even institutions operating different businesses among the same type of participants, do not need to issue the same type of license due to differences in compliance responsibilities and risk levels, and the standards and scales of issuance do not have to be consistent.
Post time: Nov-16-2023