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."

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