02 March 2013

Hey TransUnion: Credit Reports are NOT Public Records!

Last year about this same time I posted a blog entry on the alarmingly increasing use of credit reports.  You and I know that our credit reports get pulled when we apply for a credit card, an auto loan or even a mortgage.  What I am talking about is other entities that dabble into your credit report such as prospective employers and auto insurance companies.

A few months after I published that blog entry I read about a dilemma experienced by Latoya Horton, who started a petition on the Change.org website.  According to the petition backstory, Latoya went to college to study accounting but had to take out loans to pay for her education.

After all, a good college education can run you a ballpark figure of $25,000 to $40,000, if not more.  Is the purpose of a good college education a better job and a brighter future?

Latoya was offered a job in the accounting department of a well known company on a temporary basis.  Seeing that Latoya was doing a superior job the company offered her a full-time position and she was thrilled.

Unfortunately, Latoya was let go after being on the job for a few weeks.  The reason?  It was not because of Latoya's job performance; instead it was because of her credit report which had the student loan debts on there.  The official reason, according to the petition backstory:  Debt-to-credit ratio was too high.

Debt-to-credit ratio too high?  That's complete hogwash in my book.  After all, people work to pay their debts, and paying your debts is a moral obligation.

Well, there are three credit reporting agencies out there.  The first two, Equifax and Experian, specialize mainly in consumer credit reporting.  However, there is a credit reporting agency that is way more than consumer credit reporting, and that agency is TransUnion.

You got that right.  TransUnion.

A quick peek of TransUnion's website offers credit reports and credit scores.  In fact, you can even get your TransUnion credit report as part of your once a year annual free credit report but only through AnnualCreditReport.com.

But there is more to TransUnion than credit reports.  What you might know about TransUnion can shock you.

TransUnion has two products that are offered to prospective employers as well as insurance companies.  These products are called an employment score and an insurance score respectively.  What really tiffs me off is that TransUnion can sell your credit report - which is highly personal to you - to prospective employers and insurance companies, particularly auto insurance companies, for a price.  In other words, TransUnion treats your credit report like if it was a public record; all a prospective employer or insurance company has to do is pony up the cash and hand it over to TransUnion.

What does this mean to you?

First, let's say you are getting an auto insurance quote or your auto insurance renewal is just around the corner.  A good number of auto insurers, as part of the underwriting process, dabble into your credit history by electing to use TransUnion's insurance score product.  This product uses your TransUnion report - not your Equifax or Experian report - and converts elements of your report into an algorithm which is highly confidential and the resulting report is your insurance score which is sold like a public record to your insurer.

Further, TransUnion claims that their insurance score product is a predictor of how much likely a person will commit insurance fraud.  That is the most discriminatory statement I have ever heard, as TransUnion's insurance score product turns oridinary people - even people who have good credit reports - into second class citizens in the form of insurers charging exhibortantly high premiums like if you were convicted of your first DUI!

Second, let's say you got laid off from your employer due to the economic downturn, and as a result you were having difficulty paying your bills because of no fault of your own.  With the economy slowly improving, you happen to find a new job!

You are hired, and settle in and learn the routines of your new job.  While you are doing that, your new employer is dabbling into your credit history by electing to use yet another specialty product marketed by TransUnion:  TransUnion's employment score product.  Much in the same manner as TransUnion's insurance score product, the employment score product uses your TransUnion report - again, not your Equifax or Experian report - and converts elements of your report into an algorithm which is highly confidential and the resulting report is your employment score which is sold like a public record to your new employer.

Two weeks later, you get called in to the supervisor's office.  You hear the dreaded words:  "I'm sorry, but I am going to have to let you go.  The reason is that you have a bad credit profile."  You worked hard to get and keep that job, but to your new employer what appeared on that TransUnion employment score convinced the new employer that you are more than likely to commit an employment related criminal offense in the future.

Again, TransUnion claims that their employment score product is a predictor of one's job performance and/or likelihood to commit fraud in the future, despite a statement to the contrary when TransUnion admitted in one leglslative debate when it comes to credit history being a predictor of job performance.  Like the insurance score product, this is the most blatant discriminatory statement I have ever heard from a credit reporting agency!

After all, credit checks - especially when TransUnion is used as the credit reporting agency to check using one of their speciality products - create a fundamental "Catch-22" for people looking for better rates for auto insurance or for job applicants.  You got laid off and you had difficulty paying the bills, and you are rewarded with an extremely high insurance rate quote like if you had a DUI or shut out of a job opportunity.

Moreover, credit checks when they are not used for a legitimate purpose (such as applying for a loan or a mortgage) have a great potential for being discriminatory, especially members of a protected class. 

Besides, information in credit reports is inaccurate at best.  Let's say, for instance, that you have all your loan business concentrated at a credit union, and that credit union uses Equifax to make reports.  Contrary to popular belief, information reported to one credit reporting agency is not shared with the two other agencies.  In this case, your Equifax report may be the most accurate but your Experian and TransUnion reports may not be so accurate.

In short:

What TransUnion is doing is helping to destroy America's slowly recovering economy.  TransUnion is doing this by selling credit reports in the form of specialty reports to anyone who ponies up the cash and TransUnion treats credit reports maintained on you like if it was a public record.

What can be done to derail TransUnion's efforts to help destroy America's slowly recovering economy?

First, TransUnion - which I understand has been purchased by Goldman Sachs & Co. - needs to discontinue and throw into the shredder their employment score product and their insurance score product.  TransUnion needs to stay focused on its core business, which is maintaining consumer credit reports and being competitive with Equifax and Experian.

Second, Congress needs to enact legislation on the federal level that would outlaw the use of credit reports for employment purposes, save for certain positions of trust.

Third, the Florida Legislature needs to enact legislation, which can complement legislation on the federal level if so enacted, that would also outlaw the use of credit reports for employment purposes as well.

Fourth, the Florida Legislature - as well as the legislatures of the 49 states of the Union - needs to enact legislation that would outlaw the use of credit reports and/or scores for the purpose of setting a premium for auto insurance.

And something is being done right here in Florida on the use of credit reports for employment front.  A bill sponsored by Florida State Senator Nancy Detert of Venice (a community just south of Sarasota), SB 100, would outlaw this practice.  However, this is just the tip of the iceberg:  SB 100 should be expanded to outlaw any use of a credit report for employment or insurance purposes, with one obvious exception being if you are applying for employment in a position of trust such as a law enforcement officer, for example.

I wrote an email to the Florida State Senator who resides in my district, Jeff Brandes, my support for SB 100 plus amendments to SB 100 to outlaw the use of credit reports for insurance purposes.  Here is the email that I would like to share with you:

I am writing to express my support for SB 100 by Senator Nancy Detert of Venice. SB 100 as I understand would forbid the checking of credit reports by prospective employers as a condition of employment save for certain employment situations which I feel is appropriate.

Way too many Floridians have been impacted by the recent Great Recession in that Floridians have lost their jobs because of no fault of their own. Consequently, for Floridians that are out of work the tremendous financial difficulties as a result of unemployment has resulted in the temporary inability to pay monthly financial obligations such as a mortgage or a credit card payment. When this happens, it is reflected negatively on an individual’s credit report. The end result is that someone is denied an opportunity for a new job due to what is on a person’s credit report.

Further, I feel that employers should not be checking credit reports of prospective applicants for employment as part of a routine procedure because in most cases there is no legitimate need. However, as proposed in SB 100 exemptions to the proposed law would be for anyone applying for a managerial related position as well as a position of trust such as a law enforcement officer, and I would totally agree with that. The only time a credit report should be checked is if one is applying for a loan, a credit card or even a mortgage, and I do support that as well.

The passage of SB 100 is the beginning of a step in the right direction for all Floridians, especially job seeking Floridians who are being shut out of the employment process due to a negative credit report. However, I feel that we need to take this proposed credit report restriction a step further and ban the checking of credit reports by insurance companies in determining what premium is paid for insurance, especially auto insurance and homeowners insurance. Again, way too many Floridians have experienced tremendous financial difficulties as a result of unemployment and credit reports reflecting negatively from a temporary inability to pay monthly financial obligations to home foreclosures. Moreover, the use of credit reports by the insurance industry, especially the auto insurance industry, is prone to abuse as insurance companies want to find any way to charge exorbitant premiums on Floridians who otherwise have safe driving records.

I feel that the practice of checking credit reports - whether it may be for auto insurance, homeowners insurance or even as part of the employment process as addressed in SB 100 - needs to be banned completely in the State of Florida, with very narrow exceptions for certain situations. Being the nation's epicenter of the Great Recession and the economic and mortgage crisis which has resulted, more and more Floridians have experienced tremendous financial difficulties which have resulted in so many home foreclosures among other things. Once a negative item gets reported on a person's credit report it makes life for the person more difficult such as getting a job or getting insurance.

I imagine who will fight the passage of SB 100 to the very end:  TransUnion.  According to the petition on Change.org as I mentioned earlier regarding Latoya Horton's dilemma, TransUnion claims that "a credit report is a de facto economic passport for every individual in this country, whether you like it or not."

Well, TransUnion, a credit report being a de facto economic passport is true, but only in the sense of when one applies for a credit card, an auto loan or even a mortgage.  But what you are doing, TransUnion, is systematically destroying the American economy by labeling people who have had financial trouble through no fault of their own as potential criminals and second class citizens.  Despite federal laws to the contrary, you, TransUnion, through the use of your employment score and insurance score prpoducts, make a big fortune treating credit reports as public records.  Besides, your chairman, Penny Pritzker, prior to the sale of TransUnion to Goldman Sachs, served on the President's Jobs and Competitiveness Council whose task is advising the President on putting Americans back to work.

Besides, TransUnion's employment and insurance products do nothing more than steer people, especially people who are in financial straits due to the economic downturn, onto a one way street to major financial ruin including bankruptcy.  This is akin to a school district in Mississippi who operates a one way funnel from school into the criminal justice system for even extremely minor violations of school rules.

Now here's my take on TransUnion and their credit reports, especially their employment and insurance score products:

1.  These products serve no purpose whatsoever.

2.  These products label good, hard-working people as second class citizens and potential criminals.

3.  An auto insurance premium should be determined based on age, driving record and claim history - not a credit report.

4.  An employment decision should be determined based on the person's training and experience which qualifies him or her for the job - not a credit report.  However, as I mentioned earlier a credit report should be pulled only if it involves a position of trust or a position within a financial institution.

Bottom line:

TransUnion needs to stop the sale of credit reports through the use of their employment score and insurance score products like if the credit reports are a public record.  TransUnion needs to throw their employment score product and their insurance score product into the shredder, stop treating our credit reports like if they were public records and stop the systematic destruction of the American economy overall.

The State of Florida needs to put the brakes on TransUnion's systematic destruction of the American economy right here in the Sunshine State.  SB 100 is a step in the right direction, but it needs more teeth to prohibit the use of credit reports in employment and auto insurance premium decisions.

Now I want to hear from you!

If you have either had difficulty finding a new job or your auto insurance premium is way too high and it is thanks to a TransUnion product that drove the employer's or insurance company's decision, I would like to hear from you by simply leaving a comment.  Just one favor I have to ask, and that is to please keep the comments professional and clean.


Anonymous said...

Your comments are true. There has to be class action law suite or something of sort on Transunion. Until then, it will not change.

Edward Ringwald said...

Anonymous, something is going to have to give someday regarding TransUnion's discriminatory activities, and a class action lawsuit - I mean a major class action lawsuit - is one major remedy.

Until Congress or our state legislatures such as the Florida Legislature put the brakes on the use of credit reports for employment and/or insurance purposes, TransUnion's illicit activities will continue unfettered.

TransUnion destroys people's futures.

Mickey Mixon said...

I agree with this I should be privately own not to be shared by anybody.

Anonymous said...

Please listen up everyone..... If you go online to check your credit report with TRANS UNION, they are signing you up for a subscription for $17.95/month !!!!! DO NOT DO IT.... READ EVERYTHING CAREFULLY.... They are in charge of our financial scores, BUT YET THEY PULL A DECIETFUL BUSINESS PRACTICE such as this.... BEWARE.... Please pass on---- DON'T LET YOUR FRIENDS AND FAMILY GET RIPPED OFF!!!

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