What is the primary purpose of a Consumer Reporting Agency?

The primary purpose of a Consumer Reporting Agency is to prepare credit reports. These agencies collect and maintain information about individuals' credit histories, which includes data related to credit accounts, payment history, outstanding debts, and any public records like bankruptcies. The credit reports generated by these agencies are vital for lenders when assessing a borrower's creditworthiness. Consumers rely on these reports to understand their credit status, and lenders use them to determine risk before approving loans or extending credit. Therefore, the central function of a Consumer Reporting Agency focuses on compiling and providing accurate credit information, which is essential for financial decisions.