What is an investigative credit report?

A number of credit reporting bureaus and investigation firms compile information in a document known as an “investigative consumer report.” According to the Fair Credit Reporting Act (FCRA), this report contains particular information on an individual's character, general reputation, personal characteristics, and mode of living. The investigators tasked to collect data gather the necessary material from the consumer's neighbors, friends, and associates.

Also known as a background check, an investigative consumer report is commonly used for applications, particularly in employment, insurance, and home rental purposes. As opposed to a conventional credit report, this document does not include information on the consumer's credit. Likewise, lenders are not permitted to use an investigative report with regard to credit applications.

Who are people in your neighborhood?

Here is a list of the people involved in creating the investigative report, aside from you, of course:

• Users refer to the individuals or companies who will make use of the investigative report—in this case, these are potential employers, insurers, and landlords.

• Furnishers are individuals who provide information to the reporting agency. It is a must for them to acquire accurate information about the subject, or the consumer. It is also their responsibilty, as mandated by law, to correct and update inaccurate data in the event that the organization that they work for receives a dispute from the customer.

• A nationwide specialty consumer reporting agency is a third-party company hired by the user to conduct an investigation or background check on the consumer. Congress coined this term to these agencies that do research beyond an individual's credit history. The scope of research that these agencies conduct include:
◦ An individual's medical conditions, for insurance purposes
◦ Residential and tenant history, including evictions
◦ Check writing history
◦ Background checks for employers
◦ Homeowner and auto insurance claims

Aside from that, it is not the responsibility of the consumer reporting agency to decide on approving your insurance application or job application. It is ultimately the user's discretion to do so.

FTC regulations do not require nationwide specialty consumer reporting agencies to have their own websites, but quite a number of them actually do. They are required, however, to provide a toll-free number where they can be contacted, in any location that they do business in.

By federal law

Now, just because an investigative consumer report exists, doesn't mean that anyone can snoop around on you. Congress has made it possible, through the FCRA, to protect a consumer's privacy. One of the stipulations of this law states that the potential users of the report must have a “permissible” reason as to why they need to obtain the information.

Legitimate purposes under the FCRA include the following:

• A court order resulting from a subpoena
• As requested by the consumer, in writing
• For employment purposes
• For insurance purposes
• When there is a legitimate business need

The conditions specified in the Act apply not just to investigative reports, but to all types of consumer reports, such as credit reports. In addition, the FCRA actually imposes more stringent regulations on consumer reporting agencies that conduct these types of reports. Additionally, these laws apply only to third-party consumer reporting agencies. If the user himself proceeds to conduct the investigation on their own, they are not under the jurisdiction of this law.

In this light, users are required to inform the consumers in reference to any requests for investigation. They must do so in writing, prior to conducting the actual background check. The user must also furnish a copy of the consumer's rights along with the notice, as well as a clause stating that the consumer may request for additional disclosures if need be. However, criminal background checks do not fall under this particular Act. In fact, if the requester has reason to believe that the individual has participated in criminal activity, they need not inform the consumer on the proceeding. Of course, the consumer also has the right to know what is included in the investigative report, but finding out who exactly supplied the information to the investigators is not exactly necessary.

What gives?

Background checks, particularly conducted by employers, can greatly vary—they can be as simple as verifying an applicant's Social Security number, to a blow-by-blow account of the individual's history and acquiantances. In fact, some employers actually conduct searches on potential employees on social networking sites such as Facebook and MySpace. Forty-four percent of companies have used these websites to acquire information about applicants, and 39% have actually utilized these websites to dig for dirt on their current employees.

Insurers and landlords, on the other hand, request for these reports to assess an individual's risk factor. Conducting new business always entails a certain degree of risk on their end. There appears a need to assess an individual's riskiness, especially since you are an “unknown.”

When things don't go your way

When a consumer applies for a loan, a job, or an insurance claim, they usually have to fill out a number of forms for information and file purposes. One of the documents that the user needs provide the applicant is an “adverse action notice.” An adverse action occurs when the user makes a decision that is not favorable to the interests of the consumer. These include denial of an request for an insurance claim, being turned down for a job application, or not being granted a rental space. When this occurs, an individual may request for an explanation stating the other party's decision. An adverse action notice is in order—a document specifying the reasons why his or her request was not approved. Users are required by law to provide this information at the consumer's request. And just like a conventional credit report, a consumer may also correct and dispute inaccurate items documented here.

As a consumer, you will not receive the exact same document that your potential employer, insurer, or landlord received. This is where the difference between a “report” and a “file” lies. A report contains information gathered and compiled by the furnishers at any time. A file, on the other hand, carries data that the agency maintains about you. This is what the FCRA allows you to have free access to.

The user or requester of an investigative credit report, such as a landlord, employer, or insurer, must also provide the individual with the name and contact information of the agency that gathered the information. At the same time, the individual is entitled to receive a copy of his or her file from the consumer reporting agency once a year. Unlike the three major credit bureaus, however, there is no centralized agency that specifically caters to distributing these documents. There is a list of bureaus, catering to specific user requests, and you may be able to gain access to their web sites at the bottom of this page.

Where you can obtain your investigative consumer file

Here is a list of various reporting agencies that gather consumer information. Each of these organizations cater to different needs.

• SO Insurance Services (http://www.iso.com) – this company provides insurers with information on claims made against your home or motor vehicle, as well as any insurance-related lawsuits that have occurred in the past.
• The Medical Information Bureau (http://www.mib.com) – this company complies records information on their client's life-, health, long-term care, and disability insurance. Included in this report are information that the client personally provides when an insurance application is filled out, as well as any medical information obtained from a healthcare provider.
• IntelliScript (http://www.rxhistories.com) and MedPoint (http://www.ingenix.com) both provide purchasing history of prescription drug for the past five years.
• ChoicePoint and First Advantage Safe Rent www.fadvsaferent.com – contains comprehensive information on an individual's rental history.
• ChexSystems, (http://www.consumerdebit.com/consumerinfo/us/en/chexsystems) – collects and records information from financial institutions like banks and credit unions.
• Shared Check Authorization Network (http://www.creditinfocenter.com/FeaturedArticles/ChexSystems.shtml) and TeleCheck (www.telecheck.com) maintain a database of returned checks and instances of fraud and provide check authorization services to retailers.
• LexisNexis/Accurint (http://www.lexisnexis.com/privacy/for-consumers/request-personal-information.aspx) provides detailed and exhaustive information on an individual, including identity authentication, employment screening, fraud prevention, claims management, and debt collection.
• ChoicePoint (http://www.choicetrust.com) – affiliated with Lexis/Nexis, this firm documents insurance, employment and tenant history information on consumers.