The Credit Bureaus' Lesser Known Cousins; Why You Need to Keep Your Eye on Them

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Any time the consumer is denied credit or not offered the best rate, as of July 21st, lenders are required to send consumers a free copy of the credit score and/or report used to make their decision. The new law is designed to give consumers the opportunity to review and understand the information that was used when determining their credit worthiness that paints a picture of their financial history. The funny thing is, if you were to ask someone to name the credit bureaus these reports could come from, odds are, you would hear Equifax, Experian, and TransUnion.  And, they would be about 75% correct. 

Consumer information is gathered by more than the well known: big three.  In the industry, there are lesser known firms that specialize in the collection of consumer data and collectively have been referred to as the: 4th bureau.

Considering them as the credit bureaus' lesser known cousins that assemble and sell massive amounts of personal information gathered from a wide-range of public and private databases, without consumer knowledge in most cases.  Honestly, most people would be both alarmed and disturbed if they knew where and how some agencies legally bought and sold their data.  For example, would you feel comfortable to learn that the department of motor vehicles in your state sold your personal information for profit?  It may be quite surprising to hear, but many Floridian's were stunned to hear the Florida Department of Highway Safety and Motor Vehicles made somewhere in the ball park of $62 million legally selling their resident's information to help boost their revenue.     

Whether data is collected and sold for profit legally, or stolen and sold for profit illegally, truth be told; personal information has become today's currency of choice. It's become a valuable commodity. But, data that is contaminated through fraud or error, is unreliable. Here's the thing, when information collected affects everything from your ability to rent an apartment, gain employment, and qualify for a loan -the data must be reliable. And one would trust that certain measures were taken to prevent grossly inaccurate information from being handed over to lenders and employers in the first place. Well, as it turns out, that's simply not the case.  

Meet Catherine Taylor. She learned that multiple 4th bureau agencies had compiled and sold horribly inaccurate information about her --but not until she was rejected for a job. Her hope of employment with a local Red Cross chapter over four years ago came to an end when she received a denial letter with a copy of her background report.  Another Catherine Taylor's drug charges had lampooned her chances.  And, it wouldn't end there. 

The indecent exposure charges of a Cathy Taylor kept her from being able to volunteer with her daughter's Girl Scout troop. Aside from the humiliation and job rejection, Catherine has found at least 10 other companies selling reports with the inaccurate personal and financial information ruining her credit, reputation and peace of mind! "I'm guilty and then I have to prove myself innocent, and that's just not how it's supposed to be," said Taylor, has retained an attorney to force the firms to correct the records that have been haunting her life for years.

Fortunately, after the Washington Post article: Little-known firms tracking data used in credit scores spotlighted Catherine Taylor's situation and these "4th agency" practices, Consumers Union, the nonprofit publisher of Consumer Reports is urging Congress to hold hearings on firms that collect and sell personal information that may be unfairly used to draw potentially harmful and unreliable conclusions about a consumer's creditworthiness noting:

 "Most American consumers have no way of knowing that this information is being collected about them and used in ways that could affect their interest rates, housing, and employment. Even when individuals find out about the 'fourth bureau's' existence, accessing and correcting data about them is nearly impossible."

Ed Mierzwinski, Consumer Program Director for US PIRG, believes that the new Consumer Financial Protection Bureau should be able to reign in some of the larger 4th bureau agencies. Until then consumers need to keep an eye on these lesser known bureaus and their credit files!  All credit reports and scores received should be reviewed for accuracy.  After all, if you don't make sure that your information is corrected, it won't be.

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