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Credit reports score big


Aside from spot news, earnings season is a good opportunity to revisit companies, industries and issues you sometimes neglect to cover or might not have time to explore.

For example, firms posting financial results tomorrow include two credit-reporting giants, Equifax Inc. and Fair Isaac Corp. Fair Isaac, more commonly known as FICO, is the Minneapolis company that develops credit-scoring formula and related business services. Atlanta-based Equifax is one of the Big Three consumer credit reporting agencies. The other are Dublin, Ireland-based Experian and privately held TransUnion LLC, which is headquartered in Chicago.

Credit reporting is a huge, multi-faceted industry with substantial ramifications for your readers. These three agencies, along with myriad local and regional bureaus, keep track of how promptly consumers pay their bills, how much available credit they use and other financial behavior that purports to assest risk. They repackage and sell this information in a variety of ways to diverse clients.

Business is brisk – Equifax alone posted sales of $453 million in the first quarter of the year, though its profits dipped to less than $55 million. These companies often are demonized as the results of their analyses encroach further into consumers’ lives, affecting not only transactions with lenders but sometimes with employers, insurers and prospective landlords. Mistakes aside, though, they’re only slicing and dicing information that already exists based on our own behavior. While it may be galling to have giant corporations make money off of re-selling our bill-paying habits, there is no turning back now.

In writing about credit reporting for your readers, knowledge is power, and the corporate Web sites are a gold mine of information about industry issues, concerns and trends. Poke around to find story angles of special pertinence to conditions in your region. More insight is available on the Web site of the National Credit Reporting Organization, The trade group currently, for example, trumpets a membership drive aimed at resident-screening services – the businesses that check applicants’ credit for landlords and property management services. If you cover territory known for a tight rental market or housing hardships for low-income people, you could spin a new angle by talking to local resident-screening firms.

Amusingly, the agencies used to guard the results of credit scoring tenaciously, forbidding lenders from disclosing the proprietary results of their complicated algorithms. Then, a decade or so ago, the collective light bulb went on and the agencies realized they could reap even more sales by offering consumers’ own rating back to them – for a fee. Products like ‘credit monitoring’ also came into vogue over the last decade as identity theft became a much-hyped fear and now are aggressively marketed through television, the Internet and direct-mail.

If you’re covering a personal finance angle, be sure to use links or an info box to let your audience know about the Federal Trade Commission’s oversight of credit reporting and scoring, and the laws that protect individuals – such as the one requiring the credit reporting agencies to provide one free report each year. And despite the ubiquitous TV ads with the losers in the pirate hats, that’s not the site you want to endorse. The real free one is here.

Be sure also to alert your audience to the federal laws that protect them. The Fair Credit Reporting Act provides recourse them to consumers who spot errors or mix-ups on their reports.


About the Author

Veteran financial writer Melissa Preddy served as a business writer, editor and columnist for The Detroit News from 1995 to 2008, is a Michigan-based freelance journalist. She now works as a writer and editor for a medical research unit of the University of Michigan Medical School. Follow her daily posts. | E-mail: Melissa Preddy

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