How many credit bureaus are there? You might know about the Big 3: Experian, Equifax and TransUnion. Is that it? Or are there more you should know about?
We talk quite a bit about credit reports and scores, and how much they matter in our financial lives. Whether you want to purchase a home, vehicle, obtain a personal loan, or qualify for auto insurance at a reasonable rate, your credit scores will be a factor.
When you think about companies which provide credit reports, three names probably come to mind: Equifax, Experian, and TransUnion. These three companies gather a variety of data about American consumers, and sell this information to mortgage lenders, auto lenders, credit card companies, and many other firms involved in financial transactions.
As important as these three credit reports are (along with your FICO scores), they aren’t the only credit reports out there. There are also a variety of specialty credit reports, which are used to decide whether to let you rent an apartment, be hired for a job, obtain home or auto insurance, or open a bank account.
These reports often contain the same sort of credit data provided by the three major credit bureaus, as well as other information, which is relevant to the specific type of credit you are applying for. Let’s take a look at how specialty credit reports actually work, and what you need to know.
Apartment Rentals
There are a number of specialty credit reporting agencies, which provide information in connection with apartment rental applications. These include Contemporary Information Corp. (CIC), CoreLogic Rental Property Solutions, Experian RentBureau, First Advantage, Leasing Desk, Tenant Data Services, Screening Reports Inc., and Tenant Data Services.
Each of these providers typically generates a credit report which contains your credit history – the same sort of information you would recieve from Experian, Equifax and TransUnion. What these reports offer, which usually isn’t always provided in standard credit reports, is your rental history.
Through specialty reports, a landlord can find out whether you have ever been sued by a previous landlord, or evicted from your former apartment. Many rental reports also provide information about your criminal conviction history.
While landlord requirements vary, the better your credit score, the higher the chances you’ll be denied for an apartment rental. In many cities, you’ll need a FICO score close to (or above) 700, to rent an apartment, although in other areas scores as low as 600 (or even lower) might allow you to qualify.
However, keep in mind that the lower your credit score, the more likely you’ll have to provide an extra security deposit, or pay some amount of rent up front. Also, a prior eviction, landlord lawsuit, or criminal conviction, can be the basis for a denial, with many landlords, regardless of your credit score. If any of these issues apply to you, you’ll want to be prepared to explain them.
Employment Screening
Background checks before being hired for a new job are nearly universal today, with recent surveys finding that around 96% of employers conduct some sort of employment background screening, before hiring a new employee. Employment background checks contain a variety of information.
They will typically include a credit check, where an employer gains access to the information contained in your Equifax, Experian and TransUnion credit reports. Employers don’t usually consider your credit score, but rather, the information which appears on your credit reports.
They tend to be particularly concerned with certain types of negative credit items, such as collections. In the eyes of many employers, being placed in collections, is both a sign of irresponsibility, as well as the possibility you’ll be contacted during work hours by collectors. The New York Times had a great article on how poor credit led to a shoe and clothes salesman with considerable experience, repeatedly being passed over for new positions, due to his credit issues.
Having tax liens, court judgments, or a bankruptcy filing can also impact an employer’s willingness to hire you. Credit history is an especially important consideration for jobs which require security clearances, and those where you’ll be handling or around money (such as financial services). If you have negative items on your credit reports, be prepared to offer an explanation.
Besides credit history, employment screening checks very often also contain information regarding your criminal history, state licensing records, educational profile, prior military service, and whether you have ever filed for worker’s compensation before. Obviously, issues in any of these areas can lead an employer to ask you for a more detailed explanation of what happened, and to possibly deny you employment.
Major employment screening companies include The Work Number, Trak 1, Intellicorp, HireRight, First Advantage Corporation, Checkr, Accurate Background, General Information Services, Info Cubic, Openonline and Sterling Talent Solutions.
Home & Auto Insurance
Home and auto insurance providers also rely heavily on credit scores and data, in deciding the rate you’ll end up paying. A 2015 study from Consumer Reports found that having poor insurance credit history, in many states, could end up costing more, through increased insurance premiums, than being arrested for driving under the influence of alcohol.
Your auto insurance credit scores range from 200 to 997, and take into account many of the same factors as your standard FICO credit scores, as well as your prior traffic tickets, accident history, and insurance claims filed. Insurers believe (based on their experience) that people with lower insurance credit scores are more likely to file claims, which obviously costs the insurer money, and poses a greater risk for them. Therefore, the lower your insurance credit score, the more you’ll pay in insurance premiums.
There are several companies which provide the credit history used to determine your insurance credit scores. These include C.L.U.E. Inc., Drivers History, and Insurance Information Exchange,
Home insurance rates are also determined in part by credit scores, which consider many of the same factors as standard FICO scores, as well as details which are specific to the home you own, such as the neighborhood you live in, the structure of your home, and the risk of crime or natural disasters. A-Plus, as well as some of the companies listed above, generate the credit reports used to determine your home insurance credit scores.
Check & Bank Screening
Banks who open deposit or savings accounts for customers, as well as merchants who accept checks from customers, face some unique risks. What if someone overdraws money from their account, leaving a negative balance?
In that case, a bank loses funds, and is ultimately left worse off. When an individual purchases something from a store, by writing a check, and the check doesn’t clear, this merchant has now lost money.
In order to reduce such risks, banks, as well as merchants, make use of specialized credit reports. Banks often use ChexSystems, which provides data on both the opening and closing of checking accounts, including why an account was closed, as well as situations where an overdrafted account was closed. Remember that it is also possible for a closed, overdrafted bank account to be turned over to a collections agency as well, in which case it can appear on your standard Equifax, Experian and TransUnion credit reports (in addition to ChexSystems).
Companies like Certegy, CrossCheck, Early Warning Services, Global Payments Check Services Inc, and TeleCheck Services all provide data to various types of merchants, regarding whether consumers who write checks are in fact trustworthy. Of course, with the decline in checks, and rise in electronic payments, this is less and less common.
How To Manage Your Specialty Credit Reports
It is clear that specialized credit reports can have quite a large impact on your financial life. At the same time, with so many different specialty credit reporting agencies out there, how do you efficiently manage your credit scores and reports?
First, if you are planning on making a decision which would result in one of the types of credit mentioned above being used, you’ll want to make sure to check your specialty credit reports, at least 6 months ahead of time. So, if you are planning on moving over to a new job in September, you’ll want to request at least some of your specialty credit reports in March. The same is true if you are renting an apartment, applying for home insurance, or opening a new bank account.
Where can you find specialty credit reports? The Consumer Financial Protection Bureau offers a list of specialty credit reports, for each type of transaction (i.e. employment, apartment rentals, etc). Ideally, you’ll contact each of the companies listed, in the category relevant to you, and request a copy of your reports. Note that not every company will maintain a file on you – but it always makes sense to ask.
Of course, keep in mind that in addition to monitoring your specialty credit reports, before you enter into a transaction covered by these reports, you’ll want to regularly monitor your Equifax and TransUnion credit reports through Credit Karma, and your Experian reports through Free Credit Score. Check your credit reports every month, specifically, make sure that all of your accounts are being reported accurately, that no items have been placed in collections, and that there are no credit inquiries (i.e. applications for credit) which you don’t recognize.
You should also order your official credit reports from Annual Credit Report, once per year. You’ll want to follow the same criteria as above, and make sure that nothing unusual appears on the reports. If you do see something you don’t recognize, be sure to challenge it directly with the credit bureaus.
When you recieve your reports, you’ll want to review them carefully, and make sure that everything is accurate. If something appears which isn’t familiar, you’ll want to contact the credit reporting agency which provided the information, and inform them that something is not correct. It is vital that you have any incorrect information corrected as soon as possible.
Dealing With Negative Items On Specialty Credit Reports
If something negative appears on your specialty credit reports, such as an eviction from an apartment, or a job which you were terminated from, you have several options. In some cases, it is possible to have such information removed from your credit reports. Sometimes, even if the event in question (let’s say an eviction), really did happen, it is not reported accurately on your credit reports, or there is not enough information for proper verification, it can be removed.
If that isn’t possible, you’ll need to be able to offer an honest explanation for what happened. For example, if you were fired from a prior job, or evicted from an apartment, you’ll need to explain exactly what went wrong. You might want to offer additional references, and a backup plan (like providing the landlord with an extra security deposit, or working for a new job on a probationary basis), as an alternative, to make the landlord or employer more comfortable.
Whatever you do, don’t lie about or misrepresent what happened. It is very easy for landlords or employers to seek additional verification of what you claim, and lies can be easily exposed (and will have major negative consequences for you).
The Final Word
It might seem difficult to manage all of these different types of credit reports, and so much information. However, you shouldn’t worry too much. As long as you regularly check your standard credit reports, and review your specialty credit reports before applying for an apartment, job, insurance or a new bank account, and make sure there aren’t any errors (or that you have an explanation for anything bad that might appear on there), things should work out in the long run.
