Credit Bureaus

What you need to know:

Credit bureaus collect personal information (like name, address, date of birth, SSN) from public records along with financial history from financial institutions like credit cards, mortgages, car payments, student loans and increasingly from alternative sources like phone/electric bills, rent and other payments to short-term or low value credit providers.

This data is packaged into consumer credit reports and sold to banks, insurers, retailers, employers and more to help confirm your identity and to determine credit worthiness. This data is also sold to companies for marketing purposes, for example to financial institutions that send pre-approved credit offers to consumers.

Credit bureaus often have material errors in their profiles that can make individuals seem riskier than they are leading to higher interest rates, less favorable terms or denial of credit. These companies have minimal legal obligation to the direct consumer for accurate data as ultimately their clients are financial institutions and providers of credit. With these misaligned incentives, it’s often difficult for consumers to fix errors and puts the onus on the consumer to diligently monitor their score.

In addition, many instances of data breaches have occurred at these institutions, leading to the exposure of sensitive information that can lead to identity theft. One major instance impacted close to 150 million Americans.

Learn More:

How credit bureaus work and how they make money

Credit reporting agencies are increasing their data collection

Why it’s difficult to fix credit report errors and how you can successfully dispute them

Read here about the Equifax data breach that affected nearly 150 million people

How an amateur rap crew obtained access to a surveillance product from a top credit reporting agency

What to do:

It is not possible to avoid credit bureaus collecting data on you.

However, you can stop them from selling your data for marketing purposes by opting out here.

Also its important to monitor your credit report and to insure there are no errors, learn about how to do so here.