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89 Fed. Res. Bull. 47 (2003)
An Overview of Consumer Data and Credit Reporting

handle is hein.journals/fedred89 and id is 127 raw text is: An Overview of Consumer Data
and Credit Reporting

Robert B. Avery, Paul S. Calem, and Glenn B. Can-
ner of the Board's Division of Research and Statis-
tics, and Raphael W. Bostic, of the University of
Southern California, prepared this article.
For some time, the Board of Governors of the Federal
Reserve System has sought to obtain more detailed
and timely information on the debt status, loan
payment behavior, and overall credit quality of
U.S. consumers. Such information could facilitate
the Board's analysis of macroeconomic conditions,
improve its understanding of the way credit is pro-
vided to consumers, and enhance the System's super-
vision of banking activities. For decades, information
of this type has been gathered by credit reporting
companies, primarily to assist creditors in evaluating
the credit quality of current and prospective custom-
ers. The information gathered by credit reporting
companies is vast and seeks to cover virtually all U.S.
consumer borrowing.' To the extent that this informa-
tion is complete, comprehensive, and accurate, it
represents a potential new source of statistical data
for the Federal Reserve on consumer credit markets
and behavior.
To evaluate the potential usefulness of these data,
the Federal Reserve Board engaged one of the three
national credit reporting companies to supply the
records of a nationally representative sample of
individuals.2 The data provide a unique opportunity
1. The Fair Credit Reporting Act generally refers to a company that
regularly assembles or evaluates consumer credit information for the
purpose of furnishing consumer reports as a consumer reporting
agency. Such companies are also called credit bureaus or, as in
this article, credit reporting companies, Three national credit report-
ing companies-Equifax, Experian, and Trans Union Corporation-
jointly have a dominant presence in the market for credit-related
information on consumers. Each national credit reportng company
seeks to maintain records for each individual, although, for a variety
of reasons, all companies may not have the same information for a
given individual. For more information on industry structure, see
Robert M. Hunt, What's in the File? The Economics and Law of
Consumer Credit Bureaus, Business Review. Federal Reserve Bank
of Philadelphia (second quarter, 2002), pp. 17-24.
2. Identifying information, such as name, address, and social secu-
rity number, was omitted fiom the data obtained by the Federal
Reserve. The identities of the creditors, collection agencies, and other

to profile the nature and content of information con-
tained in credit reporting company records.
Assessing the usefulness of these data as a poten-
tial source of information for the Board involves
several tasks. This article is an initial step in the
process; it examines the scope and content of the
data, using a framework based on key aspects of
credit evaluation. This approach is a natural way to
begin the assessment process because the credit
reporting companies' primary purpose for collecting
these data is to facilitate credit evaluation. Future
steps will focus on other aspects of this evaluation,
including comparing measures of aggregate borrow-
ing activity and credit quality derived from the credit
reporting data with measures from other sources.
The article begins with a brief description of the
way the credit reporting companies compile and
report their data and gives background on the regula-
tory structure governing these activities. This descrip-
tion is followed by a detailed look at the information
collected in credit reports. The discussion of these
data is divided along the lines of the major com-
ponents of consumer credit report data-credit
accounts; public records relating to the person's debt
or payment obligations (bankruptcy filings, liens,
judgments in civil actions, and so on); collection
agency accounts; and inquiries regarding credit sta-
tus. The distribution patterns of items such as account
balances, credit utilization, and measures of payment
performance by type of account and creditor are
broadly described. Key aspects of the data that may
be incomplete, duplicative, or ambiguous as they
apply to credit evaluation are highlighted in the
analysis. The article concludes with a discussion of
steps that might be taken to address some of the
issues identified.
entities that reported information to the credit reporting company were
also omitted. An index variable, unique to this dataset, allowed
record of the same individual to be linked. A similar index variable
allowed records of the same creditor (or other reporter) to be linked.
Neither of these variables could be used to link to any publicly
available information.

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