What is the role of a credit reporting agency?

The role of a credit reporting agency is to keep files and records on individuals who apply for and use credit. These agencies collect information from various sources, including lenders, to create comprehensive credit reports that detail an individual's credit history, including their borrowing and repayment behavior. This information is essential for lenders when evaluating the risk of extending credit or loans, as it helps them understand a consumer's financial reliability based on their credit history. By maintaining accurate records, credit reporting agencies ensure that credit can be responsibly extended based on an individual’s creditworthiness.

Other choices do not accurately describe the primary function of credit reporting agencies. For instance, issuing credit cards and providing loans are activities that financial institutions engage in rather than credit reporting agencies. While educating consumers about credit is indeed a valuable service, it is not the main function of credit reporting agencies, which focus primarily on the collection and dissemination of credit data.