Consumer and Credit Reporting, Scoring, and Related Policy Issues

"The consumer data industry collects and subsequently provides information to firms about the behavior of consumers when they participate in various financial transactions. Firms use consumer information to screen for the risk that consumers will engage in behaviors that are costly for businesses. For example, lenders rely upon credit reports and scores to determine the likelihood that prospective borrowers will repay their loans. Insured depository institutions (i.e., banks and credit unions) rely on consumer data service providers to determine whether to make available checking accounts or loans to individuals. Some insurance companies use consumer data to determine what insurance products to make available and to set policy premiums. Some payday lenders use data regarding the management of checking accounts and payment of telecommunications and utility bills to determine the likelihood of failure to repay small-dollar cash advances. Merchants rely on the consumer data industry to determine whether to approve payment by check or electronic payment card. Employers may use consumer data information to screen prospective employees to determine the likelihood of fraudulent behavior. In short, numerous firms rely upon consumer data to identify and evaluate potential loss risks before entering into financial relationships with new consumers..."
Consumer credit reports

Consumer credit reports: A study of medical and non-medical collections

"Roughly half of all collections tradelines that appear on credit reports are reported by debt
collectors seeking to collect on medical bills claimed to be owed to hospitals and other medical
providers. These medical debt collections tradelines affect the credit reports of nearly one-fifth
of all consumers in the credit reporting system.
This paper describes characteristics of the medical and non-medical collections tradelines on
consumers’ credit reports and the processes by which they appear and disappear. It draws on
analysis of data contained in the Consumer Financial Protection Bureau’s (CFPB) Consumer .."
Consumer credit

Free Credit Reports

 "The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months..."
Free Credit Report

FTC Videos Remind Consumers to Check AnnualCreditReport.com

"As consumers turn back their clocks, it’s a good time to check their free annual credit report.

Consumers shopping for a car, looking for a job or just getting their financial house in order should check their free annual credit reports.  The FTC is offering new videos, in English and Spanish, explaining why, and advising them what to do if a report contains inaccurate information.

During the fall, when people turn back their clocks at the end of daylight savings time, it’s a good time to order a free credit report from one of the three national consumer reporting companies at AnnualCreditReport.com or 1-877-322-8228..."
FTC Videos Remind Consumers to Check AnnualCreditReport.com

FTC Reminds Job Seekers: Get Your Free Credit Report Before You Apply for a Job

"Before you apply for a job, you should know what's in your credit report, because employers may look at your credit history if they're considering hiring you. The Federal Trade Commission, the nation's consumer protection agency, reminds job seekers that they can get a free copy of their credit report at annualcreditreport.com or 1-877-322-8228, so that they can fix any mistakes they find, or explain information that might not look good to an employer.

To learn more your rights as a job applicant, read the FTC's What to Know When You Look for a Job..."

AnnualCreditReport.com

"This central site allows you to request a free credit file disclosure, commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.

AnnualCreditReport.com is the official site to help consumers to obtain their free credit report..."

New Federal Reserve Publications on Credit Reports and Credit Scores
"A new online resource from the Federal Reserve provides practical answers to questions about credit reports, credit scores, and the importance of protecting personal credit histories. The Consumer's Guide to Credit Reports and Credit Scores describes the content of a credit report, explains how a credit score is used, and discusses the role of credit bureaus in collecting and disseminating this information.

Mortgage lenders, banks, insurers, utilities, employers, and other businesses may obtain credit reports from credit bureaus to assess how an individual manages their financial responsibilities. Consumers need to know what's in their credit report and understand how negative information, such as late payments or a bankruptcy filing, might affect a lender's decision to grant credit. The guide answers questions ranging from "What is a credit score?" to "How can I get a free copy of my credit report?" to "How long does negative information stay on my credit report?" It contains tips to help consumers improve their credit scores and provides step-by-step instructions for correcting an error in a credit report.

The Consumer's Guide to Credit Reports and Credit Scores can be found at www.federalreserve.gov/creditreports. It is one of several online Federal Reserve publications, such as 5 Tips for Improving Your Credit Score and 5 Tips for Getting the Most from Your Credit Card. Many of these publications are available in Spanish."

Amended Free Credit Reports Rule Helps Consumers Avoid 'Free' Offers That Cost Money
"Starting tomorrow, a new Federal Trade Commission rule will help consumers avoid confusing ads for “free credit reports” – which often require them to buy credit monitoring or other services – with the federally mandated no-strings-attached credit reports available at AnnualCreditReport.com, or 877-322-8228. Under the Federal Trade Commission’s amended Free Credit Reports Rule, ads for these “free” offers must have clear disclosures. For example, Web sites offering free credit reports must have a disclosure, across the top of each page that mentions free credit reports, with links to AnnualCreditReport.com and FTC.gov. The amended Rule also requires nationwide consumer reporting agencies – Equifax, Experian, and TransUnion – to delay advertising for products or services on AnnualCreditReport.com until after consumers get their free credit reports. The amended Rule is effective on April 2, 2010, except for the wording of disclosures for television and radio ads, which takes effect on September 1, 2010.

Information in credit reports may affect whether consumers can get a loan or a job, so it is important for consumers to check their reports and correct any inaccurate information. Each of the nationwide credit reporting companies is required to provide consumers with a free copy of their credit reports once every 12 months upon request. Consumers can learn more about their right to a free credit report under federal law at http://www.ftc.gov/freereports"

FTC Amends Free Credit Reports Rule To Help Consumers Steer Clear of ‘Free’ Offers that Cost Money
"Starting April 1, advertising for “free credit reports” will require new disclosures to help consumers avoid confusing “free” offers – which often require consumers to spend money on credit monitoring or other products or services – with the no-strings-attached credit reports available at AnnualCreditReport.com, or 877-322-8228.

The Federal Trade Commission’s Free Credit Reports Rule will require new prominent disclosures in advertisements for “free credit reports.” For example, any Web site offering free credit reports must include a disclosure, across the top of each page that mentions free credit reports, which states:

THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV.
You have the right to a free credit report from AnnualCreditReport.com
or 877-322-8228, the ONLY authorized source under federal law..."

From the GovGab blog:
Keep Your Free Credit Report Free
"I'm sure after your Black Friday shopping some of you are wondering if you hurt your credit. By law you are entitled to one free credit report a year from each of the major credit bureaus---Experian, Equifax and TransUnion---and you can find out how to get it at annualcreditreport.com.

It's important to go to that website in particular because as Colleen showed us back in March some websites lure you in and charge you monthly fees. You may have seen TV advertisements from other companies which show people singing about their misfortune due to not checking their credit. When I wanted to check my credit, I signed up for a credit report from one of these websites. Suddenly, I found myself paying $15 a month to find out that nothing on my credit report had changed.

The Federal Trade Commission (FTC) gets complaints about situations like mine and has aired advertisements like the one above to get people to the right website. In October, the FTC proposed new rules to curb consumer confusion and stop deceptive marketing regarding free credit report advertisements. The proposed rules include requirements for these companies to put disclaimers on their advertisements and websites so consumers are less confused. FTC's deadline to implement the new rules is February 22, 2010.