Who Buys Credit Reports?

The three major credit reporting agencies (CRAs) – Equifax, Experian and TransUnion collect, compile and store credit data and sell this information to lenders, employers, landlords, insurance companies, telecommunication companies and  utilities.  They also sell information to you, the consumer.  They are all for profit companies and charge a fee of the products and services they sell.

The data is sold, primarily, so businesses can make lending decisions, offer credit, a service or employment.  Under the law, these businesses must have permissible purpose to access credit information.

The information is sold for the following purposes:Credit approval – when you apply for a loan, credit card or utilities the lender, credit grantor or business reviews your credit file to determine your ability to pay. This is permissible because you are being offered a service or product on credit.

Pre-approved offer of credit – this is usually for a credit card offer. The card issuer receives names and addresses from the CRAs based upon the issuer’s credit requirements and sends a pre-approved credit card offer to them.  This has to be a firm or guaranteed credit offer.  For example, a bankcard issuer requests the names and addresses of those that have not been more than 60 days late on one account over the last 12 months. An offer for their credit card is sent to this list.   If you don’t want to receive pre-approved offers, you can “opt out” by calling 1-888-567-8688 or 1-888-5OPT-OUT.

Account monitoring/account review – credit grantors can legally review accounts in which they have a relationship, which is usually involving credit. Some review the accounts to increase or decrease credit limits. Others monitor accounts regularly such as monthly or quarterly for changes in credit behavior.

Employment – it is becoming more common for potential employers to review credit files as part of the background check.   You must give written approval for them to do so.

Insurance – when you apply for insurance, one portion of the underwriting process includes obtaining your credit file. Insurance companies also review credit reports in the renewal process.

Consumers – you can review and monitor your own credit. Per federal law the CRAs have to provide one free credit report to each consumer every twelve months. In addition, the following states allow a free report annually: Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont.  Contact www.annualcrediitreport.com to order your free reports.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.

Categorised in: Credit Cards, Credit Report, Credit Score, Financial, Getting Credit, Money & Identity

This post was written by John Ulzheimer