How the Credit Bureaus Use Your Credit Report to Find Out More About You

Consumers may think that companies which track various aspects of their finances for the purposes of building credit reports that are as accurate as possible only keep tabs on accounts and other factors, but in fact, there is a lot more information on file with these agencies about the people whose data they control.

In reality, credit bureaus generally keep track of not only basic information like borrowers' names, addresses, dates of birth and Social Security numbers, but also far more data than that, according to a report from MarketWatch. The reason for this is simple: The more information they have about any given person, the better off they might be when trying to formulate the most accurate pictures of borrowers' standings possible, and create databases as a result of what that information tells them. Even if much of the data they collect might not be listed in credit reports, it might still be useful in other ways; for instance, the credit monitoring bureau Equifax says it has salary information for about one-third of all adults in the U.S., and it can then sell that data to lenders that may be trying to determine a prospective borrower's eligibility for a mortgage or auto loan, for instance.

In other instances, these companies might keep close tabs on consumers' employment histories, and the reasons why are similar, the report said. Those who change jobs regularly tend to have less stable finances than those who have been in the same position for some time, and in general, people who change jobs every few months are typically viewed as being more likely to fall behind on payments. This is also true of those who change addresses with regularity, because lenders might view them as being more capable of avoiding debt collection efforts on the part of lenders or other companies.

What information will show up on a credit report, and what won't?
Consumers may generally have a number of misconceptions about what will appear on their credit reports, as studies have shown that some expect their salaries, ages, and even marital statuses to appear on these documents. However, this simply isn't the case. The information that appears on a credit report is generally limited to only the accounts a person has in their name and their statuses. This includes their existence, the financial institutions controlling them, how much is owed on them, and borrowers' payment histories.

The other information that credit monitoring bureaus tend to track can also be taken into account in certain instances, but it will not appear on borrowers' credit reports because it has nothing to do with their actual accounts themselves. However, factors like salary and employment status will usually play some sort of role, because they will effect issues such as a borrower's ability to pay their bills every month; those with ongoing employment and regular salaries will be in a better position to be relied upon to meet their monthly obligations than those who may occasionally have to be unemployed as a result of their less stable work situations.

It's also important to note that in many cases, the information these companies collect which fall outside the realm of the actual accounts in consumers' names is all compiled within the rules of the Fair Credit Reporting Act, and cannot be purchased by a prospective lender as a means of evaluating consumers' eligibility without first obtaining that person's permission. (Though, typically, a lender might simply choose to deny a loan application as a result of a person's refusal to allow them to obtain such data.)

Sorting out potential problems
Consumers who are worried about what may be listed on their credit reports may want to simply take the time to order these documents from each of the three major credit reporting bureaus, as they are entitled to do free of charge once per year by federal law. When they do so, it's vital that they check them over closely to determine whether any unfair markings may be having a negative impact on their standings. These can lower what should otherwise be good credit scores to the point that the credit available to them is less affordable, or deny them access to financing they may want altogether.

If any such markings are discovered, it might be helpful for consumers to contact a credit repair law firm. Doing so may be able to help them put their situations back as they should be more expediently than borrowers might be able to accomplish themselves. That, in turn, could give them more access to the credit they otherwise deserve, and make their borrowing efforts more affordable in the future.