An overview of consumer data and credit reporting

Federal Reserve Bulletin, Feb, 2003 by Robert B. Avery, Paul S. Calem, Glenn B. Canner

Personal Identifying Information

All credit reporting company files include personal identifying information that allows the companies to distinguish among individuals and construct a full record of each consumer's credit-related activities. Files always include the consumer's name (and known aliases), current and previous addresses, and social security number. Other identifying information sometimes found in credit files includes date of birth, telephone number(s), spouse's name, number of dependents, income, and employment information. (13) These data are most often supplied by creditors; they are taken from credit application files. Information about an individual's lifestyle (for example, sexual orientation) or personal characteristics (for example, race or national origin) are excluded from credit reporting company files.

One of the challenges that credit reporting companies face is constructing a unified credit record for a consumer. This challenge arises for a number of reasons. An individual's social security number, for example, may be recorded incorrectly on a loan application, or it may be transmitted incorrectly to the credit reporting companies. Problems also arise because the identifying information may not be current or because a consumer may have accounts under different names or addresses. For instance, a consumer may be inconsistent in using a full name in all applications for credit or may change names, perhaps after a marriage or divorce. Furthermore, accounts may be difficult to link to a given consumer if the consumer's address has changed. Credit reporting companies have established a series of protocols to address each of these challenges.

Credit Account Information

Credit accounts constitute the bulk of the information in the typical individual's credit record, and thus the information on credit accounts represents the majority of the information maintained by credit reporting companies. Credit account records contain many details about each account (see box "Credit Account Records").

Credit Account Records

Credit account records include information on each "trade
line" or credit account in a consumer's credit files. They
include the following:

Account Dates

* The date the account was opened

* The date the account was closed (if applicable)

* The date the account was paid down to zero if the last
reported balance is zero

* The account verification date (the date on which information
on the account was taken)

* The date the account information was recorded by the
credit reporting company.

Account Balances

* Account balance on the verification date (if any)

* The historic high balance (For mortgage or installment
loans, this is generally the original balance.)

* Credit limit (the maximum amount that can be borrowed
for revolving or open accounts)

* Amount past due (If the account is delinquent, this is the
amount that was overdue as of the verification date.).

Payment Performance

* Payment status at the last report. This can have seven
values:

1. unknown or too new to rate

2. satisfactory or paying as agreed

3. 30 to 59 days past the due date (minor derogatory)

4. 60 to 89 days past the due date (minor derogatory)

5. 90 to 119 days past the due date (minor derogatory)

6. 120 or more days past the due date (major derogatory)

7. other major derogatory instances (repossession, charge
off, collection, judgment, bankruptcy, foreclosure, paying
under a wage earner plan).

* Payment status pattern for the previous 48 months (not
given for a major derogatory)

* Dispute code (indicates if items in the account are under
dispute)

* Remark codes (for example, notations for types of payment
problems and reasons for closing accounts).

Account Description

* Account ownership (individual, joint, authorized user,
co-signer)

* Type of creditor (commercial bank, savings institution,
finance company, credit union, government entity, retailer,
and so forth).

* Type of account

-- Closed end--a lump-sum loan that the borrower
repays over time according to an agreed-upon schedule

* Mortgage--a special type of installment account
that is secured by a primary residence or other
residential real estate such as a rental or vacation
property (1)

* Installment--nonmortgage accounts, such as auto
loans, that typically involve fixed monthly payments
that fully amortize the total amount borrowed over
the term of the loan, often secured.

-- Open end--consumers can borrow from time to time
at their discretion, typically up to some pre-authorized
limit

* Revolving--typically unsecured accounts that permit
considerable flexibility in the amount that must
be paid back in any given billing cycle, typically a
month, such as a credit card account

* Nonrevolving charge--the account holder may borrow
funds for a short period (typically a month) and
must repay in full at the end of this period

* Check credit--a special form of revolving account,
typically not accessible by a credit card, that
includes personal lines of credit and overdraft protection
on deposit-related accounts, such as a checking
account.

* Loan purpose or type (for example, credit card, charge
account, automobile loan, student loan, or FHA-insured
mortgage)

* Lender subscriber code.

(1.) An exception is the home equity line of credit, which, though
secured by real property, is typically structured more like a line of
credit or revolving account. Some home equity lines of credit are
reported as mortgages; others are often reported as open-end
revolving accounts.