Credit Collections and Services

In the US, about 700 credit reporting agencies and 4,500 credit collections agencies generate annual revenue of $15 billion. Major collection agencies include NCO Group, Cardworks, and Asset Acceptance Capital; major reporting agencies include Equifax, Dun & Bradstreet, TransUnion, and UK-based Experian. The collections segment of the industry is fragmented: the 50 largest companies account for less than 50 of revenue. The credit reporting segment is highly concentrated: the 50 largest companies account for about 90 percent of revenue.

COMPETITIVE LANDSCAPE

Demand for credit reporting and for collections services are driven by the volume of financial transactions, and by the health of the economy. The profitability of individual companies depends largely on efficiency of operations. The profitability of collections companies that buy receivables portfolios depends on their ability to assess recovery potential. Large credit reporting companies have significant economies of scale in operations. Small companies can compete successfully in the collections segment, where customer service and personal contact are important.

PRODUCTS, OPERATIONS & TECHNOLOGY

Credit reporting agencies help businesses decide whether to extend credit to customers, while collections agencies help businesses recover funds that had been loaned. Credit reports are used to evaluate applications from consumers and businesses for credit cards, auto and bank loans, mortgages, and business accounts. Collections agencies attempt to recover loans from individuals and businesses that are delinquent in making payments. Some large companies like TransUnion do both credit reporting and collections, but ...