The terms credit report and consumer reports may sound similar, but they are actually very different things. Credit reports are more common versus consumer reports, which are more rare. Both types evaluate you as a potential risk, and both are regulated by the Fair Credit Reporting Act or FCRA. Let’s dig into each one to find out more.
What is a Credit Report
Credit reports are collected and maintained by the three big credit reporting agencies (Equifax, TransUnion, and Experian). These companies collate all types of financial data about you as well as some personal details. If you have ever had a mortgage, bought a car, have credit cards, or taken out a loan, you have a credit report.
A credit report contains your name, your birth date, your home address, and your social security number. This is personally identifiable information that can be used with identity theft, which is why the Equifax and Experian data breaches were so alarming.
Credit reports also contain your entire credit history, including any loans, credit cards, student loans, mortgages, and other debts you have had over the past seven years. The credit reporting agencies keep details on each one from when the account was opened, your payment history (did you pay on time, late or not at all), and when and how the account was closed. Foreclosures and bankruptcies also show up on your credit report in a negative way.
What is Fico Credit Score
Credit reports use all this information to calculate your FICO score, and lenders consult these reports and your credit score when making a decision whether or not to lend you money. Hence, it is crucial that you monitor your credit.
Who Can Check My Credit Report
Financial institutions, banks, and other creditors can access your credit report. However, by law, they have to prove a “viable business interest,” in you to get a copy. Insurance companies and the government can also get a copy. In some cases, the courts can request your credit report in conjunction with things like child support or alimony. Employers and landlords can only get a copy with your written permission. You are entitled to a free copy of your credit report from all three agencies once per year. The Federal Trade Commission (FTC) is the government agency that oversees and enforces laws pertaining to credit reports and identity theft.
What is a Consumer Report
A consumer report also referred to as a background check is a tool used by licensing agents, employers, landlords and others who want to evaluate you before they hire you to do a job, provide some type of certification to you or allow you to access secure or valuable items.
Unlike a credit report, consumer reports include a lot of different types of information. The information comes from various sources instead of just one. A typical background check or consumer report may consist of your credit report, along with criminal history, arrest records, public records, and other information. Some examples of the type of information which can be uncovered by a consumer report are:
Marriages & divorces.
Assets (cars, boats, properties, aircraft, etc.).
Some consumer reports dig a little deeper and pull your entire educational history, employment records, military data, medical records, and even your social media activity. Personal information like previous addresses, relatives, email addresses, and any licenses and certifications will also show up.
The purpose of consumer reports is not to evaluate your creditworthiness but instead your personality type, your dependability and determine if you are a good fit for the job, license or clearance you are being evaluated for.
In summary, a credit report has a singular purpose: to determine your risk factor before lending you money. Your consumer report fleshes out an entire personality profile to assess your suitability for whatever the person or company needs from you.