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May 23, 2009

15 U.S.C. 1681a - part 3

More explanation regarding the definitions found in 15 U.S.C. 1681a of the Fair Credit Reporting Act:

"(e) The term "investigative consumer report" means a consumer report or portion thereof in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information. However, such information shall not include specific factual information on a consumer's credit record obtained directly from a creditor of the consumer or from a consumer reporting agency which such information was obtained directly from a credito of the consumer or from the consumer."

[That's a mouthful. Investigative consumer reports are really just reports about consumers that do not directly touch on a consumer's credit worthiness. One example is a report on a consumer's criminal record. Another example is a report regarding the neighborhood a consumer lives in, including the incomes of the consumer's neighbors.

While at least some of the big three credit bureaus sell investigative consumer reports (Experian jumps to mind), I have never heard of a consumer reporting agency actually directly talking to any neighbor or friend of a consumer. They certainly do not talk to anyone when investigating a consumer's dispute of an error appearing on his credit report! In reality, "investigative consumer reports" are just compilations of information about consumers that do not include credit history type information, such as criminal records, driving records, litigation records, insurance claim summaries, etc.]

"(f) The term "consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports."

[This is an important definition. As you can see, it clearly applies to the big three credit bureaus, Experian, Equifax and Trans Union. But it is broader than just the credit bureaus. It applies to any company that compiles information about a consumer for the purpose of the compiled information to third parties. For instance, Telecheck, which keeps up with whether consumers have a likelihood to write bad checks, is a consumer reporting agency since it tracks consumers' check writing history and sells this information to merchants. So just because a company does not call itself a consumer reporting agency does not mean that the FCRA does not apply to them as such.]

"(g) The term "file", when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored."

[This definition, while appearing obvious at first, is important because of 15 U.S.C. 1681g, which requires a consumer reporting agency to provide a consumer, upon request, with a copy of his or her file. The big three (i.e. Experian, Equifax and Trans Union) prefer to only provide you what they contend is your credit file. But in reality, they are only providing you with part of your "file" as that term is defined by 15 U.S.C. 1681a(g). More on that when we get to 1681g. The credit bureaus also have other information about you, such as "snapshots" of your credit report as it looked at different times in the past or your credit score. Even though these snapshots are not part of what the credit bureaus say is your file, they do fall under 1681a(g)'s definition of "file" and thus should be produced on request. Also, the consumer reporting agencies maintain "audit trails" which are about you but are routinely not produced as part of your "file". Audit trails are the actual information entered by a creditor to access your credit file (i.e. name, SSN, address, date of birth) and also includes the credit score provided by the credit bureau to the creditor and the denial codes that the credit bureau suggests the creditor use if it wants to deny the credit application. These codes translate into textual reasons for denial such as "delinquent credit obligations" or "debt to income ratio too high", etc. that you see on the adverse action letters sent by creditor to denied applicants.

Note also the qualification that it does not matter how the information is stored. If its about you, its still part of your file, even if its in computer format or has not been printed yet. Thus, I think even your credit score is part of your "file" that should be produced upon request.]

I will continue on with 1681a in the next installment.

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