Credit Rating Sharing

Who’s reading your credit report?

It’s important to read your credit rating and report to see if it’s correct because it is going to be viewed by a variety of people. The problem that many people have with credit sharing is that credit reports are being viewed by many companies who have nothing at all to do with offering consumers credit. This includes groups such as landlords, and electric, cable TV, insurance and phone companies. However, these businesses are free to use this information to decide whether or not to do business with you and how much to charge. In the past, some companies have raised their rates and the customers with the lowest credit ratings had their rates raised higher than others.

Insurance laws now state that insurance rates are to be based on causation. This means a statistical relationship between two factors must be proven. For instance, if a person has been involved in numerous traffic accidents, it has been statistically proven that they may be involved in another one and are considered a higher risk. However, there has never been anything linking a person’s credit rating and insurance risk. Being late with a credit card payment has no effect whatsoever on a person’s driving ability.

Employers also used to read credit reports while screening potential employees without the person’s knowledge. However, by today’s law, an employer must now receive an applicant’s permission view their credit report. The employer must also let the applicant know if employment is denied because of the report.

It is also believed by some financial experts that these shared reports contain many errors in them and that some credit card companies often send inaccurate reports to credit bureaus. This is done to make customers seem like bad risks, so that the competition won’t touch them, leaving more potential customers for themselves.

A June 2003 report by the Federal Reserve stated that credit card issuers could be hurting their customers by withholding some information from credit bureaus. The research stated that close to 50 percent of consumers had files that were withheld at least once by a creditor, and that this could cause inaccurate credit scores.