I was recently asked by a Loan Officer, “Why do some credit reports contain information from accounts that belong to a completely different individual? And why is that information different than what the client sees when they order their own credit report?”
For some of you, this might be common knowledge, however, there seems to be some confusion out there on how credit reports are compiled.
First, it’s important to understand that there is a distinct difference in the way the information is compiled for a credit report ordered by a consumer versus the credit report a Loan Officer orders.
When a consumer orders their own report, the Bureaus make every effort to ensure that the person ordering the report is who they say they are (must have provide a lot of detailed information about themselves) — and that the report only contains information that directly applies to that person.
Could you imagine if you could find detailed account information for other people by simply ordering your own credit report? Or if you, as a consumer, could order someone else’s report with a partial SS# and or address?
Talk about an Identity Theft goldmine!
So, when a consumer orders a credit report, the name, SS#, address, and other identifying information must match exactly with any account info listed on that report.
When a Loan Officer orders a credit report, they or their company has signed an agreement with their provider to only use Credit Reports for permissible purposes, to abide by other restrictions, and to comply with the FCRA. Simply put, they are trusted by the Bureaus with this sensitive information and are given some flexibility in terms of the availability of that information.
They are also ordering the report to evaluate whether or not they would like to lend an individual money or extend a line of credit. The Bureaus, as a result, want to provide as much relevant information as possible to the potential lender to ensure nothing is left out of the decision process.
They certainly do not want to be held liable for excluding an important piece of information that may have changed a lender’s decision (e.g. late payment on an account that was entered with a misspelling of the individual’s name).
In an effort to provide as much information as possible, the Bureaus allow for partial matching of information. In many cases, if the SS# matches exactly, they will ignore all other information such as name, address, etc. If all but 2 of the SS#’s match, the name almost matches, and there is a regional commonality, the information will also be included.
What winds up happening is you have people with similar SS#’s and names living in the same part of the country that begin to share information on their credit reports.
Victoria Smith’s info winds up on Vickie Smith’s report…
This can have a devastating impact on one’s credit score and ability to obtain financing in the short-term (until the inaccurate information can be corrected - which isn’t always an easy task!).
Mortgage Industry Professionals. Like what you see?
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