Many people wonder “where do credit bureaus get personal information?” The data is seemingly collected and assembled together in a mysterious black box. With mystery comes suspicion.
There is not that much to be alarmed by. Credit bureaus get your personal information from trusted sources, and use the data safely. Some sources may be more obvious than others. But confusion persists so we take a closer look at the four most common places where credit bureaus get personal data.
- Public Records
- Postal Services
Personal Information from Creditors
Most people implicitly understand that credit bureaus get personal information from creditors: banks, credit card companies, and other lenders. After all, the bureaus collect, store, and report on consumer credit information.
But what type of personal information do creditors provide? The type of data they provide falls into four categories:
Identifying information – When you apply for a loan the bank will ask for your name, address, and social security number. This information is used to request a credit report, and then reported to the bureaus after the account has been established.
Loan characteristics – No two loans are exactly alike. There are revolving loans with monthly limits, and installment loans specifying the length of repayment terms. Lenders provide the loan characteristics to the bureaus after opening your account.
Loan usage and payment histories – Most people associate credit bureaus and reports with payment information: the monthly balance, delinquencies, charge-offs, etc.
Employment history – When you apply for a loan you may be asked to provide information about your recent employment history. The bank may capture this information and provide it to the credit bureaus. The data appears on your report, but is not used to calculate a score.
Personal Information from Public Records
Public records are state and county government information not marked as confidential, or excluded from use by data compilers. Each state has different rules, and over time laws have changed placing restrictions on the use and dissemination of these data.
These data are typically stored by individual counties in each state. The credit bureaus pay data compilers to extract, transform, and standardize the data. Some counties still use paper files, while others have advanced electronic recordkeeping systems. Credit bureaus still get personal information from three main categories:
- Judgments are court filings after a judge has ruled that money is owed to a creditor.
- Liens are filed claims against property to secure a debt.
- Bankruptcy filings are recorded by the court.
Bureaus get Personal Data from Inquiries
Credit bureaus also get personal information when report inquiries are made. A credit inquiry occurs when a lender is evaluating a loan application, when reviewing existing accounts, when targeting prospective customers, and when consumers wish to view their own file. Personal identifying information is captured, and the inquiry itself becomes part of a report.
Your personal identifying information is needed to pull an accurate report. When this information is input to pull a report, the identifying information is stored and compared to data already captured. There may be times when new or incremental information is provided by the inquiry such as:
- New addresses
- Aliases or name variations
- Missing social security numbers
The report inquiry itself can represent personal information. Inquiries that are initiated by a loan application appear on your report, and stay there for twenty four months. Inquiries initiated by lenders for review and or marketing purposes are stored on the report, but displayed only to the consumer.
Personal Information from the Post Office
The last category where credit bureaus get personal information may surprise you. The United State Postal System is an enormous source of personal information that most people would never consider. But in many ways the USPS is the most important source of data. This information is crucial to pulling everything together into a single credit report – when possible.
Consider the three sources already noted. Almost each and every time one of these sources contributes personal information to a credit bureau something will be different:
- Name variations make matching data very hard. Is Liz Smith the same person as Betsy Smith? When Liz marries John Doe her name changes again.
- Address changes also cause matching nightmares. People move frequently, and when they move their contact information changes. Credit bureaus need to track your history over time, so tracking you as you move is crucial.
- Address inconsistencies happen all the time. You apply for one loan and omit a street directional (north, south, east, or west). Another time you might transpose a number on your zip code. The list of variations is endless.
When people move they often submit a card to the post office so their mail is forwarded to their new address. You write down your old address and your new address and indicate whether it is an individual move or a family move. The post office sells this information (National Change of Address) to credit bureaus and other data compilers to update their data files with.
Address standardization is an important step in matching your personal information together into a single file. A person with ten lending relationships may have ten address variations. The USPS publishes a delivery sequence file of every known address combination so that address data can be matched against this file.
These data sources improve the chances of combining the correct personal information together into a single file, and from mistakenly combining data from two different people together. It’s not an easy task, and explains why you may have more than one credit report.
And you thought being a credit bureau was easy?