Many people wonder, “Where do credit bureaus get personal information?” The bureaus collect and assemble files together in a mysterious black box. With mystery comes suspicion.
Do not be alarmed! Consumer-reporting agencies get your personal information from trusted sources, and use the data safely. Some sources may be more obvious than others may. Explore the four primary sources of personal data.
- Banks and other lenders
- Public records from county courthouses
- Consumer initiated inquiries
- United States Postal Service
Personal Information from Lenders
Most people implicitly understand that credit bureaus get personal information from creditors: banks, credit card companies, and other lenders. After all, the bureaus collect and update, store, and report on consumer borrowing behaviors. The type of data they provide falls into four categories:
Identifying elements – When you apply for a loan the bank will ask for your name, address, and social security number. The bank input these elements to request a consumer report. If the bank approves the account, it reports the identifying elements again during the next account update cycle.
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 after opening your account.
Loan usage and payment histories – Most people associate consumer-reporting agencies and reports with payment history: the monthly balance, delinquencies, charge-offs, etc.
Employment history – When you apply for a loan, the lender may ask you about your recent employment history. The bank may capture your current employer name and provide it to the consumer-reporting agencies. The data appears on your report. Employment history is very sparse, and rarely used to calculate a score.
Personal Information from Public Records
Public records are state and county government files 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 their use and dissemination.
These data are typically stored by individual counties in each state. The consumer-reporting agencies pay data compilers to extract, transform, and standardize the files. 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 consumer owes a debt.
- Liens are claims filed 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 lenders make report inquiries. An inquiry occurs when a lender is evaluating a loan application, reviewing existing accounts, targeting prospective customers, and when consumers wish to view their own file. Personal identifying elements are captured, and the inquiry itself becomes part of a report.
Your personal identifying elements are needed to pull an accurate report. When these elements are input to pull a report, they are stored and compared to data already captured. There may be times when the inquiry provides new or incremental elements such as:
- New addresses
- Aliases or name variations
- Missing social security numbers
The report inquiry itself can represent new 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. In many ways, the USPS is the most important source of data. Their services are crucial to pulling everything together into a single consumer report – when possible.
Consider the three sources already noted. Almost every time one of these sources contributes to a consumer-reporting agency, 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 may change again.
- Address changes also cause matching nightmares. People move frequently, and when they move their address changes. Consumer-reporting agencies 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 to forward 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 file (National Change of Address) to consumer-reporting agencies and other data compilers.
Address standardization is an important step in matching your many address variations 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. The agencies match reported address against the file to store the most complete version.
These data sources improve the chances of combining the correct personal information together into a single file, and from mistakenly combining files from two different people together. It is not an easy task, and explains why you may have more than one consumer report.
Did you think being a credit bureau was easy?
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