What Is a Consumer Report and What Does It Include?

Consumer reports are records detailing an individual’s financial and personal history, holding substantial influence over various financial and personal decisions. They consolidate data from diverse sources, providing a snapshot of past behavior and current standing. These reports are routinely accessed when consumers seek credit, housing, or employment.

Defining Consumer Reports

A consumer report is information communicated by a consumer reporting agency that bears on a consumer’s creditworthiness, character, general reputation, or mode of living. These reports are compiled by specialized entities known as Consumer Reporting Agencies (CRAs), often referred to as credit bureaus or specialty agencies. The Fair Credit Reporting Act (FCRA), a federal statute enacted in 1970, primarily governs the collection, dissemination, and use of this personal information. The FCRA ensures accuracy, fairness, and privacy within the consumer reporting industry.

The purpose of a consumer report is to provide third parties with information that helps them assess a consumer’s eligibility for various opportunities. These reports are used for specific, legally defined “permissible purposes.” CRAs collect and maintain files on individuals, acting as repositories for financial and other relevant data. This allows for informed decision-making by entities that rely on a consumer’s financial reliability or personal background.

Information Included in Reports

Consumer reports contain several categories of information. Personal identifying information includes current and former names, addresses, date of birth, and Social Security numbers. This data helps identify the consumer being reported on.

Credit account information forms a significant part of the report, detailing various types of credit, such as credit cards, mortgages, and auto loans. For each account, the report shows the date it was opened, the credit limit or loan amount, current balances, and payment history. This history indicates whether payments were made on time or if any delinquencies occurred.

Public records can also appear on consumer reports, though their scope has narrowed. Bankruptcy filings are the primary public record included. Information about collection accounts is also included. The report also lists inquiries, categorized as either “hard” (impacting credit scores) or “soft” (not affecting scores).

How Reports are Used

Consumer reports are used across various sectors to assess an individual’s reliability and financial standing. Lenders access these reports when evaluating applications for credit, such as mortgages, auto loans, and credit cards. The information helps them determine eligibility, set interest rates, and establish loan terms. A strong credit history often leads to more favorable borrowing conditions.

Insurance companies utilize consumer reports to underwrite policies, helping them assess risk and determine premiums for auto, home, and other types of insurance. Landlords and property managers rely on these reports for tenant screening, reviewing an applicant’s credit history, rental history, and sometimes criminal records. This helps them evaluate an applicant’s likelihood of paying rent on time and adhering to lease agreements.

Employers also use consumer reports for background checks, particularly when hiring for positions that involve financial responsibility or security. Employers must obtain written consent from the applicant before accessing these reports for employment purposes. Certain government agencies may also use consumer reports for specific benefit determinations or licensing purposes.

Your Rights Under the Law

The Fair Credit Reporting Act (FCRA) provides consumers with several rights concerning their consumer reports. Consumers have the right to know what information is contained in their file. They can request and obtain a disclosure of all information held by a consumer reporting agency.

Consumers can dispute inaccurate or incomplete information found in a report. If a consumer reporting agency or an information furnisher violates the FCRA, consumers may have the right to sue for damages. Consumers also have the right to privacy, meaning their report can only be accessed by those with a “permissible purpose,” such as creditors, insurers, employers (with consent), or landlords.

If information in a consumer report is used to take an “adverse action” against a consumer, such as denying credit, insurance, or employment, the user of the report must inform the consumer. This notification must include the name, address, and phone number of the agency that provided the report. Consumers have the right to opt out of pre-screened offers of credit or insurance that are based on information in their report.

Accessing and Correcting Your Report

Consumers are entitled to access their consumer reports to review accuracy. Federal law grants individuals the right to obtain one free copy of their credit report every 12 months from each of the three nationwide credit bureaus: Equifax, Experian, and TransUnion. These free reports can be accessed through the centralized website AnnualCreditReport.com. Access is available immediately online, or reports can be mailed within approximately 15 days if requested by phone or mail.

To obtain your report, you need to provide personal identification details like your name, address, date of birth, and Social Security number. The website will ask security questions to verify identity. Consumers should be cautious of other websites claiming to offer free reports, as they may require additional purchases or subscriptions.

If an inaccuracy is discovered, consumers have the right to dispute it with both the consumer reporting agency and the company that provided the information (the furnisher). The dispute process involves contacting the credit bureau. The dispute letter should clearly identify the inaccurate item, explain why it is incorrect, and include copies of any supporting documentation. It is important to keep records of everything sent.

Consumer reporting agencies have 30 days to investigate disputed information. If the information is found to be inaccurate, incomplete, or unverifiable, it must be removed or corrected. If the consumer reporting agency verifies the information as accurate, they can continue to report it. Consumers can also dispute directly with the information furnisher, providing similar details and supporting documents.