Dozens of agencies collect consumer information
In a list intended for consumers, the Consumer Financial Protection Bureau cites 39 consumer reporting agencies that collect alternative data, but it acknowledges the list isn't exhaustive.
Most consumer reporting companies specialize in a specific type of information mining. For example, LexisNexis RiskView collects mostly information contained in public records, including insights into your age and education, how often you move, whether you hold some kind of professional license and what kind of home you live in.
"Any data that's available through a courthouse, for example, bankruptcy data or criminal data, or data that's available from the county . . . all that stuff is public information," Tewari says.
Experian collects data on rental payments, but includes only positive rental information on credit reports. Clarity Services specializes in reporting your payday-loan and check-cashing history, among other financial activities, and ID Analytics pulls together the identifying information you use when applying for other loans, such as your name, address and phone number.
Some companies even collect social-media data, but many experts doubt that information will become widely used for credit scores that are crunched by a computer rather than by hand. "From an individual perspective, it's really hard to gather any tangible meaning" from social media, says Zoot Enterprise's Johnson. "Computers just don't get context very well."
Who are these guys? It's not clear
It's unclear how many of the consumer reporting companies listed by the CFPB are selling reports or scores specifically to credit card issuers -- or who else may be selling this kind of data.
However, consumer advocates say that the dearth of comprehensive, publicly available information about who these companies are and what role they play in credit decisions is a problem for consumers. "A lot of times people don't even know what these companies are," says Linda Sherry, a spokeswoman for the nonprofit consumer rights group Consumer Action.
Under the Fair Credit Reporting Act, consumers have a right to request a free copy of their alternative reports. However, some companies make it so difficult to do so that the CFPB recently sent them a stern warning. Others won't disclose the information being reported until a consumer has received an adverse-action notice after being rejected for credit.
That, too, is problematic, consumer advocates say -- especially since errors on a consumer's report could carry such hefty consequences.
"Any time data about consumers is used and they have no way to correct it or ensure it's accurate, that's unfair to consumers," Sherry says.
Consumers can request a free annual report by contacting the company directly and asking for their file disclosure. However, each company requires a different process for disclosing information, consumer advocates warn. Some companies will allow consumers to request a report online. Others require that consumers call or mail in their request.
Issuers also look within for extra data
Third parties aren't the only sources of information that issuers are looking to for alternative data, however. They are also increasingly looking at the data they already own, say experts.
That's especially true when it comes to consumers with the best credit scores. Since the recession, issuers have competed fiercely for cardholders with pristine credit, most of whom already have a fistful of cards.
To lure these cardholders into applying for additional credit, many issuers are testing fresh ways to use the data they already have to personalize offers and encourage cardholders to spend, Johnson says.
"We're being asked more and more to help them use their own data better," Johnson says. That includes analyzing what items you buy with the cards you already own, how often you use them and what kind of banking method you prefer.
The goal, Johnson says, is to use those details to offer you a card you're not only likely to apply for, but that you will also frequently use. "The competition is driving some really innovative practices," he says. "These banks are having to deal with customers on a whole new level."
For example, if you're a frequent spender with an enviable credit score, issuers may tailor the rewards they offer you based on the purchases you frequently make. Or they may grant you a higher credit line or lower APR based on internal information in conjunction with your traditional and nontraditional scores.
"These guys have some very interesting data, some very good data," Johnson says. And "they're just starting to realize the value of it."
More from CreditCards.com:
VIDEO ON MSN MONEY
Murderers, rapists and child molesters.
Credit reports are useless and are forced on consumers by reporting agencies who don't do their jobs accurately. That doesn't matter to them because they need not answer to anyone for their own mistakes on reporting. The article made these points that reflect this.
A) Most scores reflect a lower value than actual rating.
B)Credit scores are "stuck in time" because no one does maintenance to update changes.
C)The big 3 Experian, Equifax, and Trans union have actually used info from social media for reporting????? What info?
D) Reporting agencies can report anything they want and the person reported on has no recourse because they make it difficult to contact them for details. They do not hold themselves accountable nor do the banks or lending institutions have any way to verify if reported info is correct.
This info came from the article....what good are they.
One of the biggest problems I've seen is, especially for large loans (like a Mortgage) they want to see that you have and manage several credit cards before they give you a loan. They say that's because they want to see that you can be responsible with your credit.
I ask, how is it better that I spend money on credit cards, and have payment history, than that I manage my money so well that I don't have to defer payment on the things I buy every day, and thereby have lower total expenses?
If I have paid for food, and gas, and a car, and my insurance, and college, still have nice clothes, have managed to build a savings account, and have $0 in debt through all of that, why am I a worse candidate for a mortgage than someone who has managed credit well, but uses it and has debt that is still being serviced?
I said all that to say this.. It's good to bring it to something more than a number.
the credit bureaus are the devil. Truly despicable organizations.
Did you know that merely applying for credit makes your score go down?
Did you know that canceling a credit card makes your score go down?
I used to have a credit score well into the 800s. Now it is in the mid 600s.
Why? I have never been late. I do not have any negative comments.
It is because i started a new small business. Over time I have been trying to find
better interest rates on the start up costs. Just inquiring for credit kills you.
I hate these 3 moronic companies and wish they would go belly up.
One more thing... the credit score you receive when you check your own score is
not the same value that creditors receive when they check you out.
60 minutes just did a story on these crooks. Unbelievable what they reported
It's all so much BS. In 2006 or 2007 I went to the bank to see about refinancing my car loan. At that time I had been with my employer for a little over a year, after having been out of work for about a year and a half. I did not want any money from them; I did not even ask for a lower interest rate (although I told them I would not turn down a lower rate, if it were offered); I just wanted to extend the term for a year to lower my monthly payments. Of course (and I was not surprised), the computer turned me down. At the time I was current with all my bills, which were practically nonexistent, and the fact that lowering my payments, which I had managed to make all through my period of being unemployed, would make my ability to repay even more likely, were irrelevant to the computer. It looked at my lousy credit score, due in part to being late with a number of my car payments (among others) when I had been unemployed, and said "no." The loan officer was sympathetic but claimed the computer report tied her hands. Oh well, I continued working and soldiered on for another year and paid off the car loan over a year early. I had already gotten rid of all of my credit cards and bank accounts and that final car payment was the last time I paid a "financial institution" anything.
My credit score still sucks because I haven't had any credit cards, loans, or other credit history since then. In about 2 years (maybe less) even that car loan should be off of my credit history and it should be just a blank slate...which is just what I want: no credit history. This alternative data crap is just that, and an excuse to intrude, unwanted, once again into my life and privacy.
I do not trust the Credit Bureaus or their data. I have reported errors in my report and had the bureaus investigate the errors only to be told the information was good. Now how can it be good when creditors re-date debts? That is highly illegal and I've actually written letters to those jerks letting them know if they didn't get it cleaned up, they could be talking to a lawyer.
It is very frusterating that all 3 credit bureaus report different information on a person. They don't report the same information and you never know which one has the good information on you. If there wasn't 3 bureaus and only 1 central credit bureau, life would be easier. Combine the 3 bureaus, combine the workforce, get it to where you can speak to an actual individual. It is not a government agency the way they treat it and you. From what I read, you don't even see the real information that is reported to a possible lender!
Go back to the old days when things were easier. You had to sit down face to face with a banker or lender, could talk to someone at a credit card agency regarding your past issues and not be judged on the past the way it is today! It takes longer then 7 years in some instances to get the negative off your report due to unscrupulous collection agencies re-dating your debt. Unless you call them out on it, it will be resold and resold and resold and re-dated with each sale. That according to federal law is illegal and they could get in major trouble doing this.
Don't be overly concerned here ... You already know if anyone in the financial industry zeros in on anything they can lock into as an advantage for themselves they will find a way to push it into law ...
However, they can not replace a system controlled by law with one that is not regulated (which would be ideal for them if allowed) ... But will never happen ...
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.