Trax: The business of credit reporting …

Everybody knows vaguely that so-called “credit bureaus” track your credit histories and report them to lenders.



Here are some specifics about credit bureaus that you might not know …


According to MarketWatch

Each of the three major credit bureaus, Equifax, Experian and TransUnion, maintains more than 200 million files on consumers … tracking about 63% of the U.S. population.

Equifax, one of the three national credit bureaus, maintains a private database of salary records on more than 33% of U.S. adults

Selling data is a primary revenue source for the credit bureau industry.

Bureaus sell data to other companies, including insurers and debt collectors.

For example, credit card issuers pay credit bureaus for the contact information of individuals who meet specific criteria, like a certain minimum credit score.

Similarly, mortgage lenders pay bureaus for a list of consumers within a specific credit score bracket and mortgage balance so that they can contact them with refinancing offers.

Some lenders pay the bureaus for updates on existing customers.

For example, some card issuers will routinely pull credit scores on their existing cardholders to determine if they’ve become riskier.

Some credit card companies use a lower credit score as a basis for cutting a customer’s credit line or increasing their interest rate on new purchases.

I knew that the credit bureaus charged lenders for credit reports, that makes sense.

I didn’t realize that they were selling the data for credit card and mortgage re-financing solicitations.

Guess that explains why more than half of the mail I get is from Capital One and mortgage companies that I’ve never heard of.

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