Consumer reports Negatively Impacting Your Credit
The Real Credit Reports
CREDIT
Nicole Swanson
7/10/20244 min read
Consumer Reports and Public Databases
Public Databases and Consumer Reports
You can think of consumer reports as a secondary credit report. These reports exist for one reason only… to collect data on you, your family members and any known acquaintances that are linked to you by verifiable data.
When it comes to your financial health, it's crucial to understand the various types of reports and databases that contain your personal and financial information. These reports are often used by companies to evaluate your creditworthiness, determine your eligibility for loans, and even make decisions about employment or rental applications. Knowing what these reports are, how they work, and how they can affect you is the first step towards taking control of your credit.
Addressing your consumer reports is the first stop in credit restoration. Before you start to dispute with credit bureaus, your first move should be to find the sources that are producing the information on your credit reports. We will address more of this later, For now, let's move on to understanding what your consumer reports are and why public databases can ruin your chances of having a great credit outcomes even with a positive score rating.
What are Public Databases and Consumer Reports?
Ever wondered how some companies know what questions to ask you to verify your identity online? Questions like “which one of these cars did you own in 2015?” Or like “which of these streets did you live on in 2020?” or wondering how they find that car you were hiding from repo man at your brother’s house? Well, that is because of public databases and consumer reports. These reports are collections of your personal, financial, and sometimes even behavioral (criminal) information. Companies scour public databases to gather data (information) about you and compile it in one central database for lenders, creditors, landlords and employers to access for investigative or decision making purposes.
These databases are maintained by various organizations and agencies, and they collect data from a wide range of sources. I won’t bore you naming all these companies, because there are plenty. However, some of the most common public databases and consumer agencies include:
● LexisNexis / Sagestream / Innovis: These are comprehensive databases that collect information from public records, such as court documents, property records, and other publicly available data. LexisNexis is often used by financial institutions, insurance companies, and employers to verify identity, assess risk, and make decisions about creditworthiness. In other words, they know all your business. All that you make available online and when you unknowingly opt in on websites.
● Early Warning Services (EWS): This is a consumer reporting agency that focuses on banking activities. It collects data on checking and savings account histories, including information on account closures, overdrafts, and fraud. EWS records all your transactions and knows every time your account owes money to the bank. It shares this information between banks. Banks and credit unions use EWS to evaluate the risk of opening new accounts for consumers and are widely used by
Bank of America
Capital One
Chase
PNC Bank
Truist
U.S. Bank
Wells Fargo
Navy Federal Credit Union
● Chex Systems: Like EWS, Chex Systems is a consumer reporting agency that tracks your banking history. It provides information on bounced checks, overdrafts, and other banking issues. Banks use Chex Systems to determine whether to approve or deny new account applications. Nearly All banks will use Chex Systems but not all banks use EWS.
You can find a comprehensive and categorized list of consumer reporting and data collection agencies at https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/consumer-reporting-companies/companies-list/
How are These Reports Used?
Companies and institutions use the information in these reports to make informed decisions about you. Here are some common uses:
● Credit Decisions: Lenders use these reports to assess your creditworthiness. Negative information, such as a history of overdrafts or unpaid debts, can lead to higher interest rates or loan denials.
● Employment Screening: Some employers use consumer reports to evaluate job applicants. Information about financial stability and criminal records can influence hiring decisions.
● Rental Applications: Landlords may use these reports to screen potential tenants. A history of financial irresponsibility can result in rental application denials.
● Insurance Underwriting: Insurance companies use data from these reports to assess risk and determine premiums. Negative information can lead to higher insurance costs or policy denials. Most accessed through your CLUE report which is furnished by LexisNexis as well.
Why does this matter to you?
Understanding the impact these reports can have on your life is essential. Errors or outdated information in these databases can unfairly harm your financial standing and limit your opportunities. That's why it's crucial to regularly review and, if necessary, dispute and remove inaccurate information from these reports. Controlling the narrative in your reports allows you to be in control of what is produced on these reports, which helps you shape the path for a high chance of approvals and experience a higher quality life. There's so much emphasis on the credit report, which is also very important, but the consumer reports help shape the condition of the credit profiles and credit decisions.
What can you do about it?
You can start by accessing your consumer reports for whatever reason you need it. Whether for housing purposes, credit, employment etc. Once you have these reports, you will identify what you want removed based on outdated, inaccurate or invalid information. You can submit a dispute to these companies just as you do to credit bureaus. In fact, you should do this first.
The process can be a bit tedious with each disputed item being mailed out separately but if you find this process difficult for you to navigate on your own just visit www.protecttheconsumer.com sign up and follow-up the steps in your dash board to get this process started.
This information is not widely taught amongst self-proclaimed “credit experts”, but you should know it anyway. It’s the first step to successfully cleaning and restoring your credit that will have a long-term positive effect. Otherwise, you’ll find yourself constantly going back and forth with either creditors or bureaus if you are trying to bypass verifiable information on these reports.