@Info.Policy: Consumer credit has lessons for terrorism databases

Robert Gellman

GCN readers need to understand how the credit reporting system works.

Why? Just about everyone is the subject of a credit file, and lenders, employers, insurers and others use that file to make basic decisions about you. The credit reporting system also offers an interesting example of secondary consequences of security measures relying on databases of personal information.

Let's cover the basics first. Credit reporting describes how credit bureaus (technically, consumer reporting agencies) collect and disclose credit information. What's in your credit report will affect, among other things, whether you can obtain a mortgage and the interest rate you pay. Errors are common and can have a big effect on your ability to function in society. A small error can cost you thousands of dollars or deny you a house.

Longtime privacy activist and reporter Evan Hendricks has written a book, Credit Scores and Credit Reports: How the System Really Works, What You Can Do, which can be found at creditscoresandcreditreports.com. It explains how the system works, describes the players and identifies consumer rights.

For example, you can get a free credit report if someone denies you credit or if you think you are the victim of identity theft. A new law will soon require major credit bureaus to give everyone a free report once a year. The book also explains how credit scoring works, how to find out your score and how to improve it.

Pay attention to Hendricks' description of institutions that use or service the credit system's data subjects. These include identity thieves, identity theft insurers, credit rescorers and credit repairers. Not all of these activities are legal or beneficial. Identity thieves are outright crooks, and credit repair clinics are close behind.

Database services

That brings us to the credit system as a model for other database-intensive activities under consideration for homeland security purposes. Hendricks describes some of the policy, history and institutions surrounding credit reporting. This part of the book is a bit disjointed but still useful to the thoughtful bureaucrat.

Here's the point: If you set up a database to make important decisions about individuals'such as whether they will be allowed to fly on airplanes'it's likely that services, legal or illegal, will grow up around the database to help those adversely affected.

Don't plan such a database without looking at the ancillary effects. Consider how to support useful secondary services and discourage illegal conduct. Personal information systems rarely operate in a vacuum, and the credit reporting system is the poster child.

Robert Gellman is a Washington privacy and information policy consultant. E-mail him at [email protected].


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