“The poor consumer now in my mind is even more confused than they were before,” he said.
What information should go into the fourth bureau is hotly debated, and even consumer advocates do not agree on one standard. At issue is how well any piece of information can forecast future behavior — and whether these firms are choosing data that create skewed reports on consumers.
“We put numbers in a box and we somehow come up with a magical answer,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “But there’s a real subjective piece to this.”
In 2008, a PERC study concluded that utility bills are one of the most promising types of information in the fourth bureau. The study found that it boosted credit scores for nearly 20 percent of all consumers. It also allowed lenders to create scores for 10 percent of people who did not have one before.
Some consumer advocates worry that even this data could backfire on the neediest consumers. That’s because the price of energy is often volatile, and an unexpected spike could result in a late payment for cash-strapped consumers. Many aid organizations also require families to miss a payment before they can qualify for financial help.
But even the most reliable data are no help to consumers if the information is wrong. Estimates for the number of files in the Big Three that contain errors have ranged from 1 percent to 25 percent, depending on which group conducted the study. But no significant analysis has been done on fourth-bureau data.
Catherine Taylor said the errors in her files have persisted despite several attempts to correct them. Another woman with a similar name would miss a payment or commit a crime, and Taylor said she would suffer for it. When she tried to volunteer with her daughter’s Girl Scout troop, she said a background check turned up a woman named Cathy Taylor charged with indecent exposure before minors. Taylor was barred from helping out with the troop.
LexisNexis did not respond to questions on Taylor’s case. It said in a statement that it makes changes to less than 0.2 percent of background reports because of consumer complaints.
It took Taylor four years to find a job after she was rejected from the Red Cross. Taylor said she has been turned down for an apartment and now lives in a house purchased through her sister. The stress of dealing with the consequences has exacerbated her diabetes and heart problems, she said.
“I’m guilty and then I have to prove myself innocent, and that’s just not how it’s supposed to be,” Taylor said.