Businesses could soon learn much more than your credit score

Steve Chiotakis Oct 27, 2011

Businesses could soon learn much more than your credit score

Steve Chiotakis Oct 27, 2011

Steve Chiotakis: Our credit scores define the amount of loans we can take out — or lately, even the type of jobs we can have. Now, the people who brought us the FICO score part of personal credit ratings — Fair Isaac Company — is starting to tap into other kinds of personal information research, like income guessing and medication taking. That’s the story in today’s Wall Street Journal.

And Scott Thurm is a reporter for the Journal and joins us now from San Francisco. Hey Scott.

Scott Thurm: Hi, how are you?

Chiotakis: I’m doing well. What kind of information are these reporting agencies collecting?

Thurm: Well, they’re mostly collecting the same kinds of information they’ve been collecting for a long time — which is credit related information. Pretty much every bill you pay — or more importantly, don’t pay — and your mortgage and car payments and your credit cards with department stores and so forth.

But they’re also branching out into what they call “public data”: name, address — demographic kind of information — age, gender, how long you’ve lived in the house, how much the house cost, those kinds of things.

Chiotakis: And what are they doing with this information?

Thurm: They’re trying to come up with as many new ways to slice it and dice it in ways that they can find customers for. In this case, when I say customers, I mean businesses that want more insight into their customers.

And so, some of the examples we talk about in the story are products that will predict your likelihood of filing for bankruptcy, for example. Or, without asking you how much you make, they sort of estimate your income based on your credit profile.

Chiotakis: Isn’t this an invasion of privacy? I mean, I keep hearing about these stories where these companies are going deeper and deeper into people’s private lives. What does the government have to say about stuff like this?

Thurm: There’s a law that regulates the use of credit in most instances. It’s called the Fair Credit Reporting Act, and it says basically, if somebody’s going to use credit to take what the government calls an “adverse action” against you — deny you a mortgage or not give you a job — they 1. have to tell you they’re going to do it. And 2. they have to tell you that they’ve taken this action against you.

And then the people from who they got the credit information have to make your credit file available to you so you can go through it and say, “Well, here, you say I didn’t pay this bill, but I did pay that bill — go back and talk to that merchant and you’ll find out.”

Chiotakis: What does this mean for us — bottom line, as consumers?

Thurm: The big picture view is that these companies, and many others, are learning things about us all the time and applying them in new and different ways.

Chiotakis: Scott Thurm from the Wall Street Journal. Scott, thank you.

Thurm: Thank you.

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