Credit Rules Everything Around Me

You likely know the ‘Big 3’ of credit reporting – Equifax, Experian, TransUnion. But there are PLENTY of other consumer reporting agencies (CRAs) with a variety of information on you and your checking accounts, credit inquiries, job history, and all that. Per the CFPB’s list in 2019, there are over 30 CRAs! In this post, I’ll highlight a couple of these “specialty” CRAs and detail your rights under Federal law. 

The two companies I am about to share are bound under Fair Credit Reporting Act (FCRA) provisions that secure your right to a timely and reasonable inquiry to any dispute you raise about inaccurate information. Timely means that they need to investigate within 30 days of receiving your dispute.
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ChexSystems:

This CR reports info on closed checking and savings accounts – including derogatory information like bounced checks and NSFs. They even report items like suspected fraud activity. The below snippet is from ChexSystems’ website and represents a sample line item from their report. 

ChexSystems sample report

LexisNexis (using the RiskView report as an example):

This CRA’s reports are similar to the Big 3, but offer more granular detail like what assets you own and their tax assessed values. Also items like your college education (including major!) and professional licenses. 

LexisNexis Risk View sample report

If you’re anything like me then you might have some questions around why so many CRAs exist, especially when the Big 3 are so dominant in the credit reporting marketplace. Let’s break it down.


Why are there so many CRAs and consumer reports? 

With data being the driving force behind business decision making, everyone is trying to capture the sweet spot between ‘charging as high an interest rate as possible’ and ensuring ‘on-time, full repayment’ of consumer obligations. Creditors are largely figuring out that using the same-old data from the Big 3 isn’t producing new insights, so they are after whatever other information is available. 

CRAs charge fees to furnishers that submit consumer data. Therefore, one business submitting to 10 CRAs might not make business sense, but one user of the information can choose to mix and match different reports as they see fit. 

Why should consumers care about CRAs and all of these various reports?

As previously stated, companies are utilizing as much of your publicly available data as possible. The inclusion of inaccurate negative data or the exclusion of accurate positive data can have a significant effect on your credit score. Your score doesn’t just determine whether or not you get approved for credit – it influences loan pricing and whether or not a creditor will proactively increase or decrease your credit line (in the case of credit cards). 

When it comes to credit decisioning, there are creditors who may deny your application simply due to the inclusion of a very derogatory item in your credit history, regardless of what your numeric score may be. This is commonly the case with charge-offs. A charge off is an account that has become so delinquent that a creditor has written off the balance as uncollectible and closed the account. 

Why do creditors report if it’s costly?

Per Experian, consumers “may be more likely to make payments on time” when they know delinquency could affect their credit history and lower their scores. And to the furnishers’ credit (ha!), despite all of the potentially negative info that can be reported – reporting positive payment history is very helpful for customers. I’m sure you’ve seen lists of credit cards that are seen as “good for building credit” – it’s possible that some consumers choose these businesses *because* they report their credit history and wouldn’t patronize them if they weren’t a furnisher. 

According to an FTC survey in 2015, out of 84 consumers who believed disputed information in their credit report remained inaccurate after the investigation was completed by the CRA, 42 consumers, 50%, planned to abandon their dispute. Their reason for abandoning the dispute was because they didn’t feel it was “important enough” to keep pursuing.

I just want to get on my soapbox quickly and say that you have rights and I really hope you find it within important enough to stick to your guns when you KNOW that something is wrong.

Another right that you have in regards to disputing credit information is to ask a CRA to describe the procedure and steps they took to come to the determination that the data they have is accurate. Ok, I’m off my soapbox now. If you have any questions or comments on credit reporting – I’d love to hear them. 

-J