There are many reasons for financial data collection; a credit report is a form of financial data collection. Several financial institutions compile records of a person’s investments, bill payment history, and outstanding debts.
There are three main credit reporting agencies, TransUnion, Experian, and Equifax. Companies interested in giving a person credit will consult with the credit reporting agencies and will use financial data collection to determine that individuals credit worthiness.
At a Corporate Level
Companies use financial data collection to determine if a financial venture is worth undertaking such as a merger; the buying company will use the purchased company’s financial data collection to determine the end benefit to the company as a whole and determine from that point whether to continue with the merger.
Financial data collection can also be used to determine if a particular asset a company owns is still a good investment; oftentimes an overall status report of a particular branch can lead to a sell off of that particular asset, to improve a companies overall investment portfolio.
Financial data collection can even be found in the work place, some companies require credit reports on all new employees along with their drug tests and background checks. Employers like to know if they are hiring reliable, responsible people; analyzing their financial data collection can help an employer determine this information.
A bank for example may not want to hire people with credit problems, as they may consider them a risk. Mortgage companies will not hire anyone with negative activity regarding their home payments, or people who are in arrears or foreclosure over their homes.
For Home Buyers
When purchasing a home the buyer’s financial data collection is very important, a lender will determine many factors of the loan based on this information. The buyer will need to provide record to prove their financial history; a person’s loan amount, duration, interest rate, and monthly payment could all be determined by the analysis of this information.
Every Day Life
Financial data collection is a part of every working Americans daily life, every purchase of a good or service that people make are recorded, compiled, and analyzed for demographic data. Some stores ask for a phone number or zip code upon check out; this information is compared to the purchase to give the company an idea of who their target audience is for advertising and sales promotions.