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Threats to your Privacy Protection

By Andy Snyder
Published: Tuesday, February 23rd, 2010

Fair credit Reporting Act was created for reasons which include the protection of consumers’ privacy. According to this law, access to your credit report is limited and that there are certain sets information like those asked by employers and medically-inclined information could not be disclosed by credit reporting agencies without your approval. It is indeed a good credit report advice to keep knowledge about your rights and the CRA’s legal obligation. 

In spite of this, there are certain instances nowadays that really are somehow threatening the previously mentioned consumers’ right to privacy. 

Sharing of credit scores are now being more rampant thus the need for a highly accurate credit reports must be ignored rather it must be acted upon immediately. If the credit scores are generated from erroneous credit reports, this wide-spread sharing of credit scores by business units with varying orientation and concerns increases the chance of rippling the effects and damages wrong information can cause even across the boundaries of credit-related-business. 

Credit reports are now being utilized by businesses that are not credit-offering like cellular phone companies, insurance companies, landlords, and affiliates of financial firms and even gasoline stations to help them decide how much charge to give to customer or even to assess if they are supposed to do business with the consumer on the first place. 

An example of this was reported in September 2004 by Wall Street Journal. When the natural gas service offered by TXU Energy in Texas raised rates, credit scores of consumers were used to determine who to charge what. Obtaining the information from Experian, one of the three major credit bureaus, TXU based their new rates on the credit worthiness of the customers as reflected on their history of utility bills payment. 

People with low credit scores were given higher rates for the consumption of natural gas while those high credit scorers were given lower rates. This really doesn’t sound fair! In case this system will be adopted by more and more companies, it is then a wise move to follow credit report advice to work on raising your credit scores now. 

Aside from this another intriguing issue with regards to delineating from privacy protection is the insider score and affiliate sharing. In June 2003 the Citigroup Company claimed before the U.S. Senate Banking Committee that they are using information collected from its affiliates to generate internal scores that would help them decide who are eligible for credit and who are not. The claim stated that these internal scores supplements credit reports and FICO scores. 

Internal records are for “internal” use only thus consumers are given no access to it. If this is the case, information contained by those records is highly prone to errors since verification and assessment by the consumers involved are not possible. 

This situation reminds me of how credit reporting started. They are so much alike. First, information is coming from affiliates. Years ago, merchants were gathering to share information about customers. Second, this new system of using internal score for internal use only can be paralleled to the previous set up of having the consumer no access to his or her report. 

FCRA mended these controversial set-ups way back 1971, but now almost the same pattern is being utilized again by a contemporary company. Are we going back to the old ways? Is history really is fond of repeating itself?

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