In a column last month debunking myths about credit scores, I mistakenly perpetuated one.
In listing the ways that credit scores can be used, I wrote that potential employers look at your credit score to see if you're under financial stress. Greg Fisher, who runs the website creditscoring.com, called me out on my mistake.
More about Fisher in a minute. First let me set the record straight. I talked to Norm Magnuson, the vice president of public affairs for the Consumer Data Industry Association, the trade group for credit reporting agencies. He said that TransUnion, Equifax and Experian do not sell credit scores to companies for pre-employment screening. (Let me make this clear: Employers can't get the number, but they can get the report showing how much you owe and whether you pay your bills on time.)
"They have to sign a contract with the credit bureau saying what they're going to use the report for. ... I'm going to use it for employment purposes, mortgage, credit granting," Magnuson explained. "A part of the contract says they can only use it for these purposes."
What he couldn't say with 100 percent assurance was that it never happens. But Magnuson says the report is more useful than the score.
Consumers' legal rights are spelled out under the Fair Credit Reporting Act. It grants credit report access to companies that have a legal "permissible purpose." That purpose can include granting credit, collecting a debt, underwriting insurance, hiring, issuing a license as required by some government agencies and the like. Again, that's the credit report. The scores are sold to financial institutions for the purposes of making loan decisions or for resident screening so a landlord can find out your history of bill-paying or any eviction data.
Now about Fisher. He has spent more than 10 years on what I'd call a crusade. He's no fan of the credit bureaus or the secretive nature of credit scoring. He's also no fan of people who disseminate misinformation. His website shows a dogged determination to go after everyone who gets it wrong: journalists, the Federal Reserve, the credit bureaus, talk show hosts. He documents his exchanges on the site.
I imagine he has upset a few people with his terse e-mail messages requesting attribution and corrections. Chatting with Fisher, who lives in Dayton, Ohio, is a more pleasant experience. He's a consumer advocate who wants to change the game to favor the consumer once again.
There was a time, after all, when the Federal Trade Commission required credit bureaus to let a consumer know his or her score. That changed in 1996.
"I thought that wasn't too friendly, so I registered the credit scoring site domain name and started asking for my credit score," he said. The site became operational in 1998.
The site is comprehensive, with news, links, timelines, definitions, etc.
Fisher's site makes it clear he doesn't think credit scores should be secret. It's also clear that he thinks consumers and even journalists can bring about change - but only if we get the information right.
