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STAYING AHEAD Jane Bryant Quinn

San Francisco Chronicle

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There's Little Privacy Where Credit Is Concerned

nce upon a time, credit bu

ously. Information drawn from
reaus guarded their data jcal-
your credit report was available
only to people considering wheth-
er to give you a loan.

Now your name is sold widely
for maybe a penny a pop to compa-
nies that hope to sell you some-
hicle departments, telephone
thing. Banks, S&Ls, state motor-ve-
companies and many other per-
sonal-data gatherers have gotten
into the act. There are even lists of
people who credit bureaus think
will go bankrupt.

Several states have proposed
privacy laws. Representative Rich

ard Lehman, D-Calif., will intro-
duce a bill this week to tighten the
laws on credit reporting and dis-
closure. But the genie is out of the
bottle. No laws are going to make
what's known unknown.

What do you do if you don't
want your name to be sold? You
belong to the Direct Marketing As
can ask mail-order marketers who
sociation to drop your name from
their commercial lists. Write to
DMA's Mail Preference Service, 11
York, N.Y. 10163.
W. 42nd St., P.O. Box 3861, New

in writing, to remove your name You can ask other companies,

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Several states have proposed privacy laws, but the genie is out of the bottle

You can send a letter right now to
your bank or S&L saying "no sale."

all consumer-reporting agencies to
The Lehman bill would require
disclose that your name might be
cline the honor.
sold, and give you a chance to de-

Here are some other issues to
consider:

Multiple listings. Say you're turned down for credit because of information from the XYZ Credit Bureau. You get your credit report and learn that Dumbo Retailing

ta with), and write to all of them.
It's unfair to put this burden on
you, especially as you'll have to
pay for the credit reports. Con-
gress should require the store that
made the mistake to clean up the
mess at its expense.

ed to use your credit file unless
Disclosure. No one is suppos-
there's a legitimate business pur-
pose. But as a magazine reporter
proved last year, that law is not
hard to circumvent. Jeffrey Roth
feder attested that he was legiti-

mate, pald one of the smaller cred-
it bureaus $500 and got access to all W
its credit files from his home com-
puter for about $15 per file. One 1
name he checked: Vice President,
Dan Quayle who, it was reported,
carries a big mortgage and charges
more at Sears than he does at
Brooks Brothers.

Plenty of other illegitimate in-
quiries are made. A real-estate
agent might do a favor for a friend
who is seeking a divorce by check-
ing the credit report of the other
spouse. A lawyer might look into
the credit history of an opponent.

Federal law requires credit bu-
reaus to identify everyone who
looked at your credit file within
the past six months. But that's not
very long, and tracking abusers is
hard. Federal Trade Commission
Chairman Janet Steiger has asked
Congress for better enforcement
powers.

Prices. If you're turned down
for credit based on information in
a credit report, you're entitled to
get that report at no charge. Other-
$20.
wise you might have to pay $8 to

Lehman's bill would give you a
free look once a year, Given the
profits that credit bureaus make
by selling your name, that's the
least they can do for you.

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Business

Sorry, Your Card Is No Good

A nightmarish tale from the realm of consumer credit ratings

By MICHAEL G. RILEY

Who could resist the temptation?

The ever solicitous Citibank dangled before me in the autumn mail an offer of a preapproved Visa card that would grant one frequent-flyer mile on American Airlines for each dollar charged. The lure of these two American obsessions-credit and free travel-proved irresistible, so I mailed the form and soon received cards for my wife and me. A month later, after we had rung up more than $4,200 in charges (about 20% of what would be needed for a free round-trip domestic ticket), my wife pulled out the card to purchase a blouse. "Sorry," said the clerk after running the card through the computer three times. "Your card is no good. I have to take it."

A call to Citibank produced a perplexing explanation: "Sorry, you have a derogatory credit statement," in

toned the clerk. Pursuing it further, I The writer in his home office: pegged as a deadbeat
was connected to a Mr. Thomas, who
put matters even more bluntly: "This is one
of the worst credit reports I've seen," he
declared. A repossessed car, about $70,000
in tax liens, a bankruptcy adjustment plan
and scads of debts unpaid. "That can't be
me," I protested, explaining that I was a
paragon of fiscal responsibility. He was
unpersuaded.

dent of Informative Research, a mortgage-
credit-reporting company in Anaheim,
Calif.: "There are mistakes in the system.
and we have mechanisms to correct them.
but you correct the system only when a
consumer complains."

In mid-argument with Mr. Thomas, a
light clicked on in my head. Three years ago,
the Internal Revenue Service had snooped
around my neighborhood asking about a
Michael G. Riley and his horrendous credit
history. After many phone calls, the IRS ad-
mitted it had the wrong man. Perhaps my

HOW TO PROTECT YOURSELF

my credit rating. Hearing this tale. Mr. Thomas softened a bit and told me to send him some identifying papers. Then he dropped another bombshell: Citibank, he said, had discovered a "death alert" filed on my Social Security number in 1981. So not only was my credit a disaster, I was also officially dead.

Straightening out the mess took nearly four weeks, a dozen phone calls and a visit to the local Social Security office, where I had to sign an affidavit attesting, "I am indeed alive and well

." As it turned out, I had fallen victim to the single most common creditrecord error: cross-merged files. In such cases, which according to Williams afflict as many as one of every eight credit consumers, people with similar names or addresses have their credit histories mixed together. Often this occurs when a John Doe Sr. and Jr. live at the same address. Another common variation on the theme occurs when the credit histories of ex-spouses remain linked long after the divorce.

Mistaken identity is not the only brand of credit nightmare. Other glitches include out-of-date information, as when loan payments have been made but not yet recorded, and erroneous or inaccurate information supplied by creditors or consumers. Student-loan providers are notorious for incorrectly reporting that people have missed payments.

For their part, the major credit agencies contend that Williams overstates the importance of minor inaccuracies in consumer records. The agencies maintain that somewhat out-of-date or incomplete information does not necessarily hurt a consumer's chances of getting a loan. "A credit report is just a snapshot," says Barry Connelly, senior vice president of Associated Credit Bureaus, an industry-group. "What consumers fail to understand is that credit is based on

Suddenly, the credit-travel enticement had turned into a Kafkaesque nightmare of mistaken identities, computer screw-ups and human errors, all spilling out of the vast and powerful credit-reporting system that tries to keep tabs on $720 billion in to-deadbeat namesake had returned to haunt tal U.S. consumer debt. But this was not just one person's bad dream. While the credit industry claims that errors are discovered in fewer than 0.5% of individual credit records, some analysts believe glitches are more common. According to a study by James Williams of Consolidated Information Services, a New Jersey credit bureau, 40% of the 150 million people with credit histories on file with the three largest repositoriesTRW in Orange, Calif., Trans Union in Chicago and Equifax in Atlantahave one or more errors in their files. While most of the errors are triv-Always peek at your credit profile before apply ial or benign, others can wreak hav- ing for a big loan, and try to check it once a year. oc. For the most part, people remain Contact each of the three major agencies, since blissfully unaware of the problems they do not share information. And tell a potential until, like me, they are mysteriously lender up front about any credit woes in your past. stripped of a credit card or rejected for a loan. Says M.E. Buckner, presi

The first step in discovering errors is to get hold of your personal credit report. Credit reporting agencies, listed in the Yellow Pages, will send a copy for about $15 (or free for anyone who has been denied credit in the previous 30 days).

If you find an error, notify the credit bureau, which under law must investigate and correct any mistakes. If the matter remains disputed, you can tell your side of the story in a 100-word statement that the credit bureau must attach to your report.

history, not on how you are this moment, this day."

The credit agencies point out that banks, credit-card companies and other consumer lenders sometimes fail to report promptly on the status of their accounts. Another problem in the industry is that federal law prohibits the credit repositories from sharing information, so that updated information that reaches one databank may still be missing from others.

Although Citibank finally reopened my Visa credit line, it has not returned my wife's card. But it did mail me an R.S.V.P. certificate to apply for another Citibank-American Airlines frequent-flyer credit card. And this one offers a free round-trip companion plane ticket. Wonder if I should apply. -With reporting by

Theodore P. Roth/New York

WORKPLACE

5/30/90p.Bl

More Employers Check Credit Histories Of Job Seekers to Judge Their Character

By GILBERT FUCHSBERG

Staff Reporter of THE WALL STREET JOURNAL

There's growing cause to worry about your credit record: It can cost you a job.

In a practice affecting hundreds of thousands of job seekers, a fast-rising number of companies are checking the personal credit reports of prospective employees to judge their integrity.

Many jobs applicants may never even know it's happening. That's because companies often don't tell them-sometimes in violation of the law, critics maintain. Some also question the predictive value of the reports and charge that many companies misuse them to obtain personal data they aren't supposed to consider, such as age or marital status.

Employers using credit reports, however, contend that knowing how an applicant handles bills, loans and other financial obligations helps predict whether he or she is likely to steal, sell company secrets or otherwise act irresponsibly on the job.

Many banks and retailers that routinely consult credit reports before granting credit lines or loans have long used the reports to screen would-be tellers and cashiers. But, citing rising internal theft and concern about their liability for worker wrongdoing, a broader range of companies are using the reports to screen for all types of positions.

Alternative to Lie Detector

The boom in credit screening follows tight limits on polygraph testing that took effect last year. In response, the nation's three big credit-reporting agencies began marketing their files to employers hungry for an alternative evaluation tool.

Equifax Inc. of Atlanta, which started selling its employee-screening reports in July 1988 just after the lie-detector ban was signed into law, claims it sold 350,000 of its reports to some 15,000 employers in 1989. It says demand in the first quarter of this year ran 71% ahead of the same period last year. Trans Union Credit Infor mation Co. of Chicago began selling employee-screening reports last November and says it sold nearly 26,000 in March alone. TRW Inc.'s credit data division in Orange, Calif., introduced its reports in December but declines to release figures.

Some employers praise the reports. After a rise in theft that it traced to employees, Barry's Jewelers Inc., Monrovia, Calif., started using credit reports last

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month to supplement job interviews, appli-
cations and "pencil and paper" tests,
tiple-choice questions on ethical dilemmas.
which seek to gauge integrity through mul-
"It's one more added precaution," says
Carolyn J. Harrington, director of loss pre-

vention and internal audit.

Of 62 candidates screened during the
first three weeks of the program, Barry's
rejected 16, including three for problems
arising from credit reports. "We deal with
loose diamonds, we deal with highly resal-
able merchandise," Ms. Harrington adds.
"You have to take every opportunity avail-
able to you to prevent hiring a thief."
'More Pressure'

Nordstrom Inc., the department store
chain based in Seattle, runs credit checks
on finalists for "sensitive" jobs in its secu-
rity, financial and credit departments.
"When somebody's having financial prob-
lems, there's more pressure on them to do
things they otherwise wouldn't do," says
John Walgamott, who as the chain's credit
manager oversees 400 people who handle
customer charge accounts. "One person

Roger Roth could hit you for thousands of dollars."

Abbott Laboratories, a Chicago-based maker of medical supplies, evaluates credit reports as "part of the routine reference-checking on everybody," says Ellen Walvoord, director of corporate communications. "If a person had serious financial problems as revealed in their credit report, it could affect their suitability for certain positions," she adds, declining to be more specific.

At less than $5 each, credit reports are cheap. They are also simple to obtain, since the big credit agencies sell online computer access to their data bases.

Not every company is biting, but those that are often are skittish about discussing the practice. J.C. Penney Co. consults the reports on a "selective basis," says a spokesman, but he wouldn't elaborate. "We really don't care to talk about how we're using it," he says.

Secrecy can affect job seekers, too. Un der the Fair Credit Reporting Act, the pri mary federal law on credit reports, credit Please Turn to Page B5, Column 1

would flag no more than 10% of "all the

More Firms Check Credit Histories people who are acting irresponsibly on the

Of Job Seekers to Gauge Character

Continued From Page B1 agencies must tell applicants they are be ing probed only if their files contain public records on "adverse" matters, such as ar rests, suits, court judgments and tax pe nalties. About 8% of reports contain such records. TRW says.

Employers, meanwhile, needn't inform job seekers about a credit check when they apply (though many do so on application forms). But when rejecting someone "elther wholly or partly because of informa tion contained" in a credit report, the law says a company is supposed to let that per son know and identify the agency supplying the report-steps often ignored, those familiar with industry practices contend.

"People are being denied employment because of what's in their credit report. and are never told that's the reason," says Ken Yarbrough, a San Rafael, Calif., credit consultant who once managed se curity for TRW's credit data business.

"It would not surprise me that users of credit reports are not aware of their obli gations." says Jean Noonan, associate director for credit practices at the Federal Trade Commission, which regulates credit report practices. Without disclosure, she adds, people might never learn to check for troubles or errors in their records. Job Applicant's Experience

Sunday K. Summer of Bossier, La.. says she was rejected for six different jobs as a hospital scrub nurse and drug store clerk last year after employers checked her credit report. The report states that her college loans were delinquent-she says they were deferred-and also refers to a bankruptcy-law filing made by her husband in 1981, when he divorced his preVRAIS wife. The doctor that finally hired her as an assistant said "that he had done Some investigating and knew that I needed the job based on my debts"-specifically a $14,000 car loan that he couldn't have known about, she says, unless he had checked her credit report.

"It really felt awkward," Ms. Summer says. Having debts, she adds, "doesn't mean I'm not going to be a good worker."

Barry's Jewelers and Nordstrom say they strictly follow the law when rejecting applicants for credit concerns; Abbott declines to comment on its procedures. At Dallas-based EDS Corp., when job offers are rescinded because of concerns arising from credit reports, applicants initially are told merely that "it's because of the background investigation," says Jon T. Senderl ing. public relations manager. Only "if a person asks further," he says, does the company specify the reason. Mr. Senderling insists that "everything we do is cornpletely within" the law.

But Ms. Noonan of the FTC says companies must identify the role of credit reports to spurned applicants forthrightly. not just when asked.

Interpretations of credit reports can vary widely. One employer might balk at hiring someone with a string of late Visa payments, while another might overlook more serious problems, even loan defaults or bankruptcy.

The lack of standards can lead to abuses. Besides financial history and other background information, credit reports may note a person's age, marital status and dependents-personal data most employers don't seek on applications or in Interviews because, under equal employment laws, considering them is discriminatory.

Yet Trans Union specifically sees its report as a way to answer "some of the questions that you can't ask an applicant," says Pat Malloy, a product support coordi nator. "This can fill in the holes." 'Inadequate Protection'

David F. Linowes, a University of IIIInois professor and expert on privacy issues, says he believes it "is not uncom mon" for employers to exploit credit reports for personal information that could unfairly--and illegally-scuttle the chances of job applicants. People "do not have ade

quate protection," he says.

Moreover, some employee-testing experts contend credit reports can't reliably predict trustworthiness. They note that credit records can contain inaccuracies, honest people can accrue bad credit reeords and people with clean credit records aren't immune to temptation. "Managers naively assume there's a link between a poor credit rating and theft exposure." says John W. Jones of London House, a Chicago personnel evaluating firm.

Scrutinizing credit reports before hiring

job," estimates Val J. Arnold, vice presi dent of Personnel Decisions Inc., a Minne apolis testing firm.

Credit reporting agencies and compa nies can't cite studies linking personal fi nancial problems to dishonesty: they say anecdotal experience and common sense prove the value of credit reports.

Still, William Byham, president of Development Dimensions International Inc., a Pittsburgh-based personnel testing firm, worries that companies are bound to unjustly reject many promising applicants if credit reports continue to gain appeal. "Everybody's looking for a quick fix," he says. But "you have to spend a little time and money on selection if you want to get good people."

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