A Credit Bureau You Never Heard Of

2018, Jul 04    

According to Krebs on Security, it is time to setup a few more credit freezes!

A freeze works to protect one’s credit file only if a potential creditor (or ID thief) tries to open a new line of credit at a company that uses one of the big three bureaus or Innovis. But Kerskie’s investigation revealed that the mobile phone merchants weren’t asking any of those four credit bureaus. Rather, the mobile providers that dinged the credit of Kerskie’s clients instead were making consumer credit queries with the National Consumer Telecommunications and Utilities Exchange (NCTUE), or nctue.com.

​The whole article is worth a read but this part is extra horrific:

Many people who have succeeded in freezing their credit files with Equifax have nonetheless had their identities stolen and new accounts opened in their names thanks to a lesser-known credit bureau that seems to rely entirely on credit checking entites operated by Equifax.

​You can create the NCTUE freeze here. I just did it and it worked fine. Seems like they have cleaned things up a bit since this article was written on May 9th, 2018.

I disagree with one of the article’s closing thoughts:

“It’s frankly laughable that consumers should ever have to pay to freeze their credit files at all, and yet a recent study indicates that almost 20 percent of Americans chose to do so at one or more of the three major credit bureaus since Equifax announced its breach last fall. The total estimated cost to consumers in freeze fees? $1.4 billion. With a freeze on your files, the major credit bureaus stand to lose about one dollar for each time they might have been able to sell your credit report to a potential creditor, or potential identity thief.”

If anyone should pay for the management of credit files, it should be the subject of the credit file. Requiring the assessor to pay creates a perverse incentive for the manager seek as many assessments as possible with limited accountably to the subject. It also inspires accessors to create organizations like the NCTUE that will allow them to operate under the radar of the subject.

When a manager can sustain a viable business when only the subject is responsible its fees to manage the credit file, the subject’s incentives and the manager’s incentives are more closely aligned. (There is room to debate if this payment should come in the form of fees to the the private sector or in the form of taxes in the public sector.) In the age where so much values is placed on our personal data, this kind of incentive alignment is the only way the subject’s credit file will be protected.

This industry seems ripe for disruption. It needs a new model that can take into account the need and incentives of the credit file subject, accessor and contributor.