January 16, 2021

Your Money Adviser: Exploring Companies That Collect More Than the Standard Credit Data

You may know that you’re supposed to check your credit report for accuracy, and that you’re entitled to a free copy each year, available from a central Web site maintained by the three major credit bureaus.

But you may not know that there are many other companies that also collect consumer information — including your employment history and income.

Under the Fair Credit Reporting Act, you’re entitled to a free annual report from many of them, too. That option may be of particular interest if you are planning to apply for a loan, a credit card or a new job, or for government assistance. Or you may simply be curious to know what personal data might be given to prospective employers or lenders.

A major provider of such data is Equifax Workforce Solutions, a subsidiary of the credit bureau Equifax that verifies job and income information for employers, lenders and government agencies through a service called The Work Number. (The federal government has hired the company to verify incomes of those seeking subsidized health insurance or government coverage under the Affordable Care Act. Under the contract, it must develop a plan to indicate the accuracy of data and to reduce the risk of fraud.)

Equifax Workforce Solutions, also known as TALX Corporation, obtains its data directly from its employer clients, which it says number 2,900, including 70 percent of the Fortune 500. It’s a separate business from the credit bureau, and data from the two aren’t commingled, said Dann Adams, the unit’s president, in a telephone interview.

The verification service was created to help employers manage requests to confirm salary and employment information, such as when their workers applied for mortgages, Mr. Adams said. Employers hire Equifax to save time and monitor compliance with privacy laws.

Client companies provide employment, payroll and sometimes benefits data to Equifax, which then makes it available, for a fee, to banks, employers and others that it confirms are authorized to receive it. (That includes collection agencies, although Equifax says it releases only employment information like your job title and date of hire to them — not pay details.)

You may be wondering: Do I have a say in any of this?

Equifax says it provides information only to those with a legitimate reason under the Fair Credit Reporting Act, and requires anyone seeking income or salary numbers to obtain your explicit consent before releasing it. “The employee has to give permission,” Mr. Adams said.

Data that identifies workers is owned by the employer, not by Equifax, and isn’t distributed to other data collectors, Mr. Adams said, though the company does sell employment trend reports, based on its analysis of anonymous data used with its clients’ approval.

The Federal Trade Commission reached a $350,000 settlement with TALX in 2009 over complaints that it failed to provide necessary disclosures to users of its consumer data and to the companies that provide the information. In an e-mail, the company said that it was complying with the credit reporting act “and has reported evidence of compliance annually to the F.T.C. as required by the settlement.”

Still, it makes sense to check the accuracy of the data Equifax may have on you, since demand for income verification is growing. Mr. Adams said the increase was partly a result of recent legislation requiring credit card companies to verify a consumer’s ability to pay before issuing a card.

In addition, the major credit bureaus (Experian and TransUnion, along with Equifax) have faced criticism from consumer advocates over the accuracy of their data. A recent study by the trade commission found that roughly 5 percent of consumers had errors in their credit reports that could result in higher interest rates on loans.

Agencies providing employment and salary data “haven’t had that level of scrutiny, so we don’t know what the level of accuracy is,” said Chi Chi Wu, a lawyer with the National Consumer Law Center. “I would be surprised if it’s better.”

Kevin Kuhn, compliance director at Equifax Workforce Solutions, said its employment data was accurate because it was provided and owned by the employer; Equifax acts as “steward” of the information but doesn’t change it, he said.

Unlike with credit reports, there isn’t a single site where you can request your free annual employment and salary report; you must apply directly to each specialty company. (Among the others that provide job and income verification services are AccuSource and InVerify. The Consumer Financial Protection Bureau maintains a list of companies that collect personal financial data of various kinds, but it is not comprehensive.)

If your employer uses The Work Number, you can probably obtain your report at theworknumber.com. Otherwise, the site offers a toll-free number (866-604-6570) or a form to send by mail; you’ll need to provide your Social Security number as well as proof of identity, like a copy of your driver’s license and a utility bill.

The report will include all employment records the company has on file for you, and will show what companies have sought verifications in the last 24 months. If you’ve never worked for a company that uses The Work Number, however, the report probably will be blank.

Here are some other questions that may arise as you apply:

■ How long will it take to get a report?

According to the form on The Work Number, your request will be processed in 15 days and the results will be mailed to you.

■ What should I do if I find a discrepancy?

The Work Number’s Web site says you can call the service at 800-367-2884, and it will contact your employer to investigate.

■ What if I feel the company isn’t adequately handling my inquiry?

You can file a complaint with the Consumer Financial Protection Bureau.

Article source: http://www.nytimes.com/2013/08/31/your-money/exploring-companies-that-collect-more-than-the-standard-credit-data.html?partner=rss&emc=rss

Bucks Blog: Millions May Be Affected by Credit Report Errors

About 5 percent of consumers in a new study had errors in their credit reports that could lead to them paying higher rates for loans.

The study, from the Federal Trade Commission, examined credit reports for 1,001 consumers obtained from the three major credit bureaus.

“These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the agency’s Bureau of Economics, in a prepared statement about the study, which was mandated by Congress.

About a quarter of consumers in the study had at least one potentially significant error in one of their three credit reports, the report found. But correcting the errors didn’t always result in a meaningful increase in their credit scores.

Over all, 26 percent of the participating consumers identified at least one “potentially material’ error in at least one of their three reports. The report defined a “potentially material error” as an alleged inaccuracy in information that is commonly used to generate credit scores. That includes things like the number of accounts sent to a collection agency, the number of credit inquiries, and the number of late or missed payments.

Twenty-one percent of the study participants, or 206 people, went through a standard process to challenge the errors, and received a change to their credit report after the dispute.

Just 129 people, or 13 percent of the participants, experienced a change in their credit score as a result of the change in the information in their credit report, the analysis found, but the maximum change in score for over half of the consumers was less than 20 points.

Just 5 percent (52 people) saw their credit scores increase enough to move them into a lower-risk credit tier, which would make them eligible for a lower interest rate on, for instance, a car loan.

However, the report noted that the major credit bureaus are estimated to have files on at least 200 million consumers. So that translates into about 10 million people who could unnecessarily be paying higher rates on loans.

Credit reports are prepared by the three major credit bureaus (Experian, Equifax and Transunion) based on data reported by lenders like banks and credit card companies; credit scores are calculated using different models, based on information in the credit reports. The study used FICO scores, the three-digit scores most commonly used by lenders.

Over all, the report said, while a “notable” number of consumers may have inaccuracies on their credit reports, the effect of the errors on credit scores is “generally modest,” and there’s often no change in the credit score if they’re corrected. “For a few consumers, however, the impact is large,” the report concluded.

John Ulzheimer, a credit-industry expert, says the study suggests errors are far more frequent than an industry-backed study in 2011, which found that fewer than 1 percent of reports have material errors. But the F.T.C.’s findings also are far less dramatic than estimates from groups like the U.S. Public Interest Research Group, he said, which found in a 2004 report that more than three-fourths of credit reports have errors of some sort.

The findings underscore the importance of checking your credit reports. Federal law allows you to check them for free at least once a year, at annualcreditreport.com, but few consumers take advantage of the free copies.

Have you tried to correct an error in your credit report? What was the result?

Article source: http://bucks.blogs.nytimes.com/2013/02/11/millions-may-be-affected-by-credit-report-errors/?partner=rss&emc=rss

Bucks: Get Bad Loan Terms? Now You’ll Get Some Clues Why

Did you apply for a loan but receive a higher interest rate than you think you deserve? You’re now entitled to receive a few clues about how the lender arrived at its decision.

A federal law that went into effect at the beginning of the year requires lenders to make certain disclosures to consumers when they receive less favorable credit terms than those given to borrowers with more pristine credit histories. That may come in the form of a higher interest rate, or a smaller line of credit.

Lenders can comply with the new law, which is essentially an update to the Fair Credit Reporting Act, by sending you one of two notices, said Careen Foster, director of scores product management at FICO, the company that developed the FICO credit score, the measure used most frequently by traditional lenders to determine creditworthiness.

In one of those notices, the lender must disclose which credit report it used to judge you — most lenders use the reports created by the three major credit bureaus, Experian, Equifax and TransUnion. The lender also must provide information on how to get a free copy of the report. Before the new rule, only individuals who were denied credit were entitled to a free copy. You must request the copy within 60 days of receiving the letter — known as a “risk-based pricing notice” — though it won’t include a copy of your credit score.

Alternatively, lenders can choose to send all consumers who are approved for credit another notice — known as the credit score disclosure notice — that will include their credit score. In most cases, the score will be one of your three FICO scores.

The goal of the new rule is to help consumers more broadly understand how their credit reports are used, and encourage them to identify any errors and request to have them fixed, Ms. Foster said. “By getting consumers engaged in the process, we will help everyone make better decisions,” she added.

But starting July 21, anyone who is denied credit or who receives less favorable terms than other borrowers must receive a free credit score (if a credit score was used in the lender’s decision). The new rules sprang from the financial regulation overhaul last year.

“All of the disclosure notices will start to look pretty similar” at that point, Ms. Foster said. “This is good for consumers because they will get the credit score the lender uses, which is going to be the FICO score more often,” she added. It will also include “the factors as to why their score wasn’t higher and what they can do to improve their score or get better terms next time.”

Technically speaking, the July law requires the so-called risk-based pricing notices to include a score, in addition to information about where to get the credit report the lender used in the decision.

Lenders are already required to send a letter to consumers who are denied credit or whose existing terms were changed for the worse. The notice must outline their reasons and provide information on how to get a copy of their credit report. In July, those letters must include scores too, said Manas Mohapatra, an attorney in the division of privacy and identity protection at the Federal Trade Commission.

Some lenders, however, will continue to comply with the law by sending notices – with scores — to all borrowers who receive credit. FICO has a Web site, ScoreInfo.org, which provides more information for consumers about the changes.

Have you received one of these notices in the mail? If so, was it helpful in clarifying why you received the terms you did?

Article source: http://feeds.nytimes.com/click.phdo?i=fc5d3e62ec63a65d130cdaf0b1fa4abf