Consumer Credit File

What Is a Consumer Credit File?

A consumer credit file is a collection of data about an individual’s borrowing and repayment activity. Your credit file contains the information that determines your credit score. When you apply for an automotive, mortgage, or other type of loan, the financial institution will check your credit file to see whether you appear to be a good or bad credit risk. You can see what’s in your credit file by requesting your credit report from each of the three main credit bureaus.

Understanding Consumer Credit Files

A consumer credit file contains your basic identifying information, including your name, Social Security number, address, and phone number, along with any other previous names, addresses, and phone numbers. It sometimes shows your current and former employers as well. The credit file shows what types of debt you have, which may include credit cards, installment loans, mortgages, and more. It shows who has inquired about your credit in the past two years and when they inquired, and it contains any negative credit information such as bankruptcies, liens, judgments, and past due accounts that have been sent to collections.

Most of your consumer credit file is dedicated to information about your current and past accounts, including when you opened each account, what your highest balance has been, the type of account (whether it is an individual or joint account), the account balance, the date of your last payment, and the amount of your last payment. For each account, your credit file also shows whether you have made payments on time each month, how late any late payments have been, and whether your account has ever been delinquent.

Consumers have three credit files, one with each of the three major credit bureaus: Experian, Equifax, and TransUnion. Sometimes all three files contain identical information, but sometimes one file will contain an account that another file does not. Some lenders and creditors do not report their customers’ borrowing and repayment activity to all three bureaus, which creates differences among the same consumer’s credit files.

Credit File Determines Credit Score

Sometimes, consumers confuse the terms credit file and credit score, or use them interchangeably. One way to think of it is that the information in your credit file determines your credit score. The credit score itself is a statistical number based on an algorithm that measures your credit risk using the information in your credit file. Many consumers know that creditors and lenders use the credit score to help determine whether or not to give a consumer credit. But it’s also helpful to know that your credit score often is used to help determine the terms you are offered or the interest rate you will pay for a loan. Usually, the higher your credit score, the lower the interest rate you’ll have to pay.

Freezing Consumer Credit Files

Hacks at consumer credit bureaus have drawn attention to the dangers of sharing data from your credit file. Such hacks often end up with criminals gaining access to valuable personal and financial data for customers. The information is then sold to other nefarious characters, who use it run a steep debt or extract more money from the victims. A recent example was the data breach at Equifax, one of the three consumer credit bureaus that maintain credit files, that compromised personal information, such as Social Security numbers and dates of birth, relating to 147 million Americans.

One of the ways to avoid theft of personal data is to freeze credit files. A credit freeze is also known as a security freeze and stops criminals from accessing your file by "freezing" access to it completely. The freeze extends to new creditors and other agents making it impossible for them to access your file unless you explicitly provide permission to do so.

However, access to your credit file is available to the credit holder, previous creditors, and debt collectors. A security freeze does not prevent credit holders from changing jobs, renting apartments, or purchasing insurance. They are required to lift the freeze by contacting the bureaus. If the request is made by phone or email, the bureaus should lift the freeze within an hour. If the request is made by mail, the credit bureaus should lift the freeze within three business days of receiving the request.